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Net1 subsidiary retains Sassa contract by default

Net1 Ueps’s share price closed 11.32 percent higher on Friday on the news that its subsidiary Cash Payment Systems had by default, retained the right to continue with the contract to distribute R120 billion in grants until March 2017. The share closed at R233.81 after Net1, the provider of payment solutions and transaction processing services, issued a notice on the JSE news service that it had been the only choice left after three bidders failed to make the grade. “The company is committed to continue with the provision of a high level service to the South African Social Security Agency (Sassa) and the social grant beneficiaries in accordance with the service level agreement and the court’s order,” the company said. The other bidders submitted incomplete bid papers and failed to meet mandatory requirements. According to a report by Business Times yesterday, the other bidders are understood to be Vodacom, Standard Bank and Durban Knight Investments.

The initial tender, won by Cash Paymaster Services, was ruled invalid by the Constitutional Court in April last year. This was after the losing bidder, Absa subsidiary AllPay, approached the High Court, which found the tender process had not complied with the requirements set out in the tender documents, and was procedurally unfair. Net1 had shunned re-bidding for the tender in August and said the company would do well without the government grant tender. Its management had considered the financial feasibility of the request for proposals, along with further questions raised by prospective bidders, execution of the firm’s strategic plan, legal risks, reputational risk and long-term value creation for shareholders. “Management believes the deployment of the company business plan, which focuses on providing a comprehensive suite of transactional products and services, will allow it to service all South Africa’s unbanked and underbanked citizens, including social grant beneficiaries, but independently and without Sassa’s limitations and constraints,” it said. Net1 also said the execution of its business plan would no longer be limited by a five-year contract.

Source: www.iol.co.za

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Net1 subsidiary retains Sassa contract by default

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