Jabu Mabuza - Chairman Alex Smith - Chief Financial Officer Ali Mazanderani - Non-Executive Director Dhruv Chopra - Investor Relations.

Good day ladies and gentlemen and welcome to Net 1 UEPS Technologies Incorporated, Quarter Four of 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note that this conference is being recorded. I’d like to hand the conference over to Mr. Dhruv Chopra. Please proceed sir..

Thank you, Judith. Welcome to our fourth quarter 2020 earnings call. With me today is our Chairman, Jabu Mabuza; our CFO, Alex Smith; and our Non-Executive Director, Ali Mazanderani. Our press release and supplementary investor presentation are available on our Investor Relations website, ir.net1.com.

We will be referring to certain slides in the presentation during our prepared remarks. As a reminder, during this call we will be making forward-looking statements, and I ask you to look at the cautionary language contained in our Form 10-K regarding the risks and uncertainties associated with forward-looking statements.

In addition, during this call we will be using certain non-GAAP financial measures and we have provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. We will discuss our results in South African Rand, which is a non-GAAP measure.

We analyze our results of operations in our press release in Rand to assist investors understanding the underlying trends of our business. As you know, the company’s results can be significantly affected by currency fluctuations between the U.S. dollar and the South African Rand. We will have a Q&A session following our prepared remarks.

And with that, let me turn the call over to Jabu..

Thank you, Dhruv. Welcome to the Net 1 results presentation for the quarter and financial year ended June 30, 2020. This being my first results as Chairman since taking on the role in July, the last quarter has been a time of change and renewal at Net 1.

On the Board, Net 1 welcomes three new Directors in May being Antony Ball, Ali Mazanderani, and myself. That was followed in June by the appointment of Mr. Kuben Pillay and the resignation of four long serving directors, being the Former Chairman, Chris Seabrooke, Paul Edwards, Alfred Mockett and Alasdair Pein.

Let me take this opportunity to thank them for their service for Net 1 over many years. We have also established a capital allocation committee that will be Chaired by Antony Ball, who is a highly accomplished investor in the private and public market. In addition to the Board changes, we have had a relative change.

Herman Kotzé announced that he will be stepping down from the CEO role in September. Herman has spent 22 years with the group. On behalf of the Net 1 Board, I would like to extend our senior well wishes to Herman for his future endeavors. Our CFO, Alex Smith will take over as Interim-CEO until the Board finalizes the appointment of a permanent CEO.

To ensure quality during this transition period, I’ve also set up the weekly Chairman’s meeting. Finally on this theme on change and renewal, we have initiated a strategic review process during the last quarter.

To ensure independence, the review was led by non-Executive Director, Ali Mazanderani, who is an accomplished investor and operator in the financial technology business globally. During this presentation, Ali will share the key insights from this strategic review.

All of this change and renewal has been driven by the goal of unlocking value for shareholder in this deeply undervalued company. Change is a journey rather than a single event. But we have taken the significant initial steps over a very busy last quarter. I am excited to be part of this journey as Chairman.

I will now hand over to Alex, to walk you through the Q4 financial and operational results. .

Thank you, Jabu, and good day to everyone. I hope that everyone is healthy and safe during these unprecedented times. We’ll follow a slightly different format today, where I will address some of the operational, financial and capital allocation topics, and then Ali will discuss our strategy which was born after the recently concluded strategic review.

We will then open up the call to Q&A. Before we dive in, I'd like to echo Jabu’s thanks to Herman. We are very grateful for his significant contribution to Net 1 over the years. During his tenure at Net 1 the company attained a number of significant milestones and he leaves the business well capitalized with a solid platform for growth.

While the COVID-19 pandemic is global in nature, given the current mix of our operations, the most relevant and material impacts for Net 1 are experienced in South Africa and therefore limited parallels can be drawn between the trends in the U.S., Europe and many other markets and South Africa.

Since the easing of restrictions in South Africa on the 1 June, 2020; however, our ability to operate our business has picked up immediately, though it continues to be affected by the ongoing impact of the pandemic on the wider economy and the ability and willingness of people to move around South Africa freely.

Despite these disruptions and restrictions, I am proud of our employees who continue to serve our customers during this unprecedented time, and would like to thank them for their tireless efforts.

The key financial highlights for the fourth quarter of 2020 includes, in the fourth quarter total revenue was $26 million, which was a 14% decrease year-over-year in South African Rand, excluding the impact of the SASSA implementation fee reversal in the last quarter of 2019.

The decrease in revenue was due to the effect of the COVID pandemic on forgone fees and lower financial and value added sales, as well as low ad-hoc technology sales and lower international processing volumes. The total quantifiable impact of COVID-19 on our adjusted EBITDA was ZAR32 million or $1.8 million during the quarter. The U.S.

dollar at $17.28 to the Rand in the fourth quarter of 2020 appreciated 22% against the South African Rand compared to the fourth quarter of 2019, which adversely impacted our reported results. The Rand is positively recovered to between $16.50 and $17 over the past few weeks.

The fourth quarter 2020 fundamental loss per share was $0.22 compared to $3.05 of fundamental loss per share a year ago. This compares to a fundamental loss per share in the third quarter of $0.11.

We reported an adjusted EBITDA loss from continuing operations of $12.2 million due to lower revenue in South Africa, higher losses internationally and the effects of the pandemic and a $1.3 million Cell C inventory write-off. Excluding the net impact of the pandemic, and once off items, adjusted EBITDA loss would have been $9.1 million.

By segment, South African transaction processing reported revenue of $14.2 million in the fourth quarter of 2020, down 9% compared to the fourth quarter of 2019 and down 20% in the third quarter of 2020, but it’s on a constant currency basis and largely due to the effects of COVID on transaction volumes and fees, including the two months when were unable to charge for certain transaction fees during the lockdown.

International transaction processing, generated revenue from continuing operations of $1.4 million in the fourth quarter of 2020, which was down 12% compared to the fourth quarter of 2019, but up 3% versus the third quarter of 2020 on a constant currency basis.

The year-over-year decrease in revenue in the segment was primarily due to an ongoing contraction in international transaction volumes.

Lastly, financial inclusion and applied technology segment revenue from continuing operations was $12.6 million, down 13% compared to the fourth quarter of 2019 and down 20% compared to the third quarter of 2020, largely due to delayed technology sales and the unwinding of the loan book during the lockdown period given new loan origination was severely curtailed in April and May, which resulted in a commensurate reduction in loan revenue and profits.

Our cost base in South Africa remains relatively stable. During the quarter we paid a $17.5 million termination fee in cash to cancel our option to acquire a further 35% interest in Bank Frick. Other material non-recurring items included a $7 million loss on the deconsolidation of CPS.

Our equity accounted investments generated earnings of $1.1 million in the fourth quarter of fiscal 2020, down 33% compared to the prior year, due to the losses incurred by V2 and Carbon. At June 30, 2020 we had unrestricted cash of $218 million and no debt. U.S. dollar denominated balances were $171 million after the total.

Our weighted average share count has remained relatively constant at $57.1 million shares during the fourth quarter of 2020. Moving on to some operational highlights, the number of active bank accounts remained relatively stable at 1 million.

New account originations were also curtailed during the lockdown, and we have opened approximately 15,000 new Finbond bank accounts through June 30, 2020. Our ATM network utilization declined by about 10% in April and May as our branches were shut down during the lockdown.

However, we have seen a meaningful recovery starting in June and in August 2020 transactions through our fixed and mobile ATMs were at or near two year highs.

EasyPay switching volumes and pre-paid airtime and electricity sales were lower in the fourth quarter of 2020 as a result of the lockdown restrictions in April and May, before partially recovering in June 2020.

Nonetheless, EasyPay revenue increased 4% year-over-year in constant currency as a result of bill payment revenue increasing by around 28% year-over-year, given the trend towards electronic payments and the signing up of new bonus years.

As expected, our lending book unwound during April and May as we were unable to originate new business and our revenue from lending activity decreased in the fourth quarter of fiscal 2020 as a result.

However, our lending book has recovered since restrictions were eased and the number of new loan originations increased from around 500 in April to 30,000 in May as a result of the new mobile loan origination channel, and further to in excess of 130,000 loans in June 2020.

The loan book finished June 2020 at fairly [ph] in the 7 million range, largely in line with the end of the third quarter of 2020 and indeed the fourth quarter 2019. Despite the challenging conditions in the border economy, we have not had [ph] any deterioration in the collection rates in the loan book.

Our strategic investments had mixed fortunes during the pandemic and we continue to work closely with all of these partners. Some key highlights include, Bank Frick delivered a strong performance in the quarter, benefiting from increased trading income and reported net income of 1.8 million Swiss francs in the first half of 2020.

Finbond reported solid results for the year ended 29, February 2020 during our fourth quarter, but issued a trading statement into late June, indicating that their earnings were likely to be more than 20% down in the half year to August 31, 2020 due to the effects of the pandemic on both, their South African and North American operations.

We continue to work closely with Finbond in terms of the roll out of new products in the provision of software and systems. Carbon had a difficult quarter as a result of the direct impact of the pandemic on Nigeria and their business directly.

However, their rapid management action in the early stages of the lockdown protected the business and they've seen a steady recovery in lending levels, and therefore revenue over the last couple of months while improving credit quality.

MobiKwik saw a slowdown in revenue levels over the quarter and has proactively managed its product mix to limit the impact on EBITDA. They are well placed to benefit from the pickup in activity as India emerges from the pandemic and especially given their profile as an Indian owned and managed fintech business.

They expect to return to pre-COVID revenue levels before the end of the calendar year, and then resume their growth path, which has seen even double revenue every 12 months or so, up until the onset of the pandemic. Cell C continues to make progress towards a critical recapitalization and remains in our balance sheet at a zero value.

The underlying business itself is improving its operating performance and is undergoing a significant right sizing exercise. However, the need remains for a recapitalization in order to achieve sustainability. Let’s now move on to capital allocation.

A key feature of the strategic review process that has been undertaken and will be discussed by Ali later on this call, with a focus on responsible and appropriate capital allocation.

Following the various disposals contained in the last financial year, the group has a substantial cash balance and an opportunity to rebuild a sustainable business, while taking into account the expectations of stakeholders.

As we previously disclosed, we are working towards formally determining our status under the Investment Company Act, which includes filing an application with the SEC relating to that determination.

This process involves amongst other things, analyzing the potential impact of our anticipated performance and revised strategic direction on our status under the Investment Company Act. We anticipate filing such applications with the SEC in due course.

Until we formally determine our status under the Investment Company Act, we do not believe we will be in a position to return capital to shareholders in an efficient manner, unless in implementing our revised strategic direction it becomes clear that such a forward determination is no longer necessary.

Lastly, I'd like to go over our thoughts about physical 2021. We’ve seen an meaningful improvement in various metrics since the effects of the severe lockdown were lifted on 31, May 2020. Our loan book in South Africa has recovered from its lows, fixed and mobile ATM utilization has improved and bill payments continue to grow.

Therefore we do expect to see a sequential improvement in top and bottom line performance for the group, but in order to achieve a sustainable improvement and return to profitability for the company, we will need to see consistent progress on; one, continued growth in the loan book; two, an increase in the number of bank and financial services customer; and three, reduced loses from our international businesses.

We do intend to focus more intently on the South African market, and while we expect monthly EBITDA to turn positive during the course of the year, we believe it is prudent to get a few more months of data before we would be in a position to offer full year guidance or profitability targets for the full year.

I’d now like to hand the call over to Ali to go over the Net 1 strategy. .

Thank you, Alex. As is my first time addressing to shareholders of Net 1, it’s probably best to provide you a brief background before we get to the crux of the strategy review. I’ve been appointed to the Board as a Non-Executive Director in May 2020.

In addition to my duties as a Director, I’m also consulting to Net 1 on its strategic review, and I’ll continue to be involved in supporting the business through the implementation of that strategy.

Prior to my role in Net 1, I spent the last decade investing in financial technology businesses around the world; in Latin America, Africa, The Middle East, India and Southeast Asia.

Several of these businesses have grown into $1 billion plus market capitalization companies and I have really seen the power of a strong value proposition that enables under-serviced populations to access digital financial services.

The evolution of the business over the past two years and the need to focus on our competencies form a critical influence in the strategic review process. One of the most notable recent developments was the establishment in the capital allocation committee of the Board.

I am a member of that committee and we are tasked with ensuring that shareholder funds in the business are allocated prudently. On a housekeeping note, I will refer to certain slides and supplemental investor presentations, which is being posted on Net 1’s Investor Relations site, and will also be available on the webcast. I’ll start with slide seven.

What are Net 1’s Core Competencies? When we commenced the strategy review, our first task was to identify Net 1’s core competencies and where it has a clear white right to win. The first to Net 1’s core competencies is the provision of low cost financial services to under-serviced consumers.

These include unsecured credit, transactional banking and a digital wallet, insurance and various value added services. The second is Net 1’s unique ability to provide secure payment processing in offline and rural environments.

In this area Net 1 has proprietary technology in UEPS, under a well-established payment processor EasyPay, which is a market leader in parts of the bill payment ecosystem. Both of these competencies have been proven in the South African market.

The common thread between them is competencies that enable under-served segments within both the consumer and merchant populations to access digital financial services. We also assess the geographic split at Net 1’s current consolidation operations, following the disposal of the Korean operations.

96% of employees are in South Africa and 97% of revenues are generated in South Africa. So Net 1 today is primarily a South African business. On slide eight I will want to preamp one question that we are likely to receive. Does this mean you are focusing on South Africa? The answer is, yes.

That is when Net 1’s current core competencies are, where Net 1’s staff and revenue are, and it also represents sizeable market opportunity, with more than R150 billion of TAM, Total Addressable Market.

My experience is being that single country emerging markets payments companies can reach significant scale, and I think this is borne out by the several billion dollar plus payments businesses coming out of emerging markets, from Brazil to Nigeria and Egypt to Bangladesh. Slide nine.

South Africa is primarily a cash based economy, with approximately 60% consumer retail transactions still being conducted in cash, similar to many other middle income countries. There are really two key points to take from that fact. First, there is a secular shift away from cash towards digital payment methods.

South Africa is part of the shift, and is in a similar phase of transition as other middle income countries. And second, there is still a lot of headroom for this tailwind to play out as cash will still be 60% to transactions. On slide 10, the addressable market.

Within that overall South African context, we looked at Net 1’s total addressable market or TAM based solely on its current competencies.

We looked at the TAM in two broad categories; the consumer financial services TAM, which is estimated to approximately R57 billion or approximately $3.4 billion; and the merchant financial services TAM, which is estimated at approximately R104 billion or $6.2 billion.

The conclusion therefore is that Net 1 currently has the competencies and technologies to target two sizable addressable markets within South Africa, with a combined TAM of R150 billion Rand or over $9 billion U.S. dollars. I’m now on slide 11, the characteristics of the addressable markets.

Our detailed analysis further determined that Net 1 is well positioned in the under-service measures on both the consumer and merchant side.

On the consumer side, Net 1 has the proven capabilities to provide credit, insurance, transactional banking and what features to a bottom of the pyramid base that is undeserved by other competitors in the financial services industry.

On the merchant side, the under-served portion is the sizable SME, Small & Medium Enterprise and MSME, Micro, Small & Medium Enterprises for which there are an estimated 700,000 formal merchants and 1.4 million informal merchants.

Net 1 is well positioned to serve as both markets with the merchant side having particularly attractive secular growth characteristics. It’s important to note that although I am talking of these two markets separately, the two offerings often interlinked.

It is quite rare to find a business like Net 1 that has already invested in the technology needed to provide most major payment services independently, whether issuing or acquiring or bill payments, at the same time as offering a range of financial services like lending and insurance. Slide 12 outlines a stylistic vision for Net 1.

We hope – we try to bring this holistic offering to life on this slide using a single merchant as an illustrative example. Our research classifies MSME as well as sales of approximately 600,000 South African Rand per annum; that is only $36,000, so this is a small merch. Today these businesses primarily deal in cash.

Providing a secure cash deposit process for them is an important use case, particularly with the security concerns in the South African market. Net 1 with its existing fixed and mobile ATM infrastructure in under serviced areas is well positioned to provide diversion of this service. This is the cash deposit revenue stream at the top.

In addition to supplying their existing cash business, Net 1 can also drive cross-sell opportunities and generate additional revenue from these merchants in two key areas. First, by line there is merchants to accept digital payments, which in South Africa are mostly card payments at the moment. This would provide acquiring revenue to Net 1.

Second, is to enable the merchants to offer bill payments and value added services like airtime and electricity sales. This leverages EasyPay’s existing capability and provides additional revenue to both merchant and Net 1. The offering I just described is a traditional merchant offering.

What is exciting is that Net 1 also has the capability to offer the merchant an EasyPay wallet or transactional bank account to store their funds and potentially to settle their funds in. This will provide issuing revenue to Net 1. In addition, once you have the point to sell infrastructure in the field, you can bank the customer on your platform.

You’re able to provide lending and insurance products based on the solid understanding of the merchants cash flow requirements and ability to repay.

The combination of these services might be expected to result in a take rate of between 2% to 5% of total merchant spend, simultaneously the merchant benefits, because when these services are provided as a package offering, there are efficiencies created.

For example, a bill payments business where the offering is typically prepaid, can be netted off against an acquiring offering with merchants who settled following the transaction, which can create a lower cost to sell, especially when leveraging the same infrastructure.

The efficiency benefits of providing a bundled solution are also likely to help drive digital adoption faster as the economic case is more competitive. Slide 13 relates to Net 1’s existing infrastructure.

How do we make this full service offering a reality and what do we need? The short answer is that Net 1 is already very well positioned and owns and controls many aspects of the distribution, infrastructure, technology and licenses.

There are some gaps, for example in the distribution in the MSME market, which is the point of sale terminal live end of distribution infrastructure. However, Net 1 has began to deploy point of sale devices in partnership with the South African bank in order to address this opportunity.

The other gaps which would be beneficial to fill to enhance Net 1’s offering include a mutual banking license, which would enable Net 1 to reduce its cost of sales across multiple payment streams from acquiring the ATMs, as well as its safe deposits and certain rights [ph] and a fresh and relevant brand.

So, in short there’s work to do in filling the key gaps that Net 1 by and large has the capabilities, technology and infrastructure to make the strategic vision a reality. Net 1 currently services both the consumer and merchant market, and has the capacity to bring the two of them together to provide a listed service.

This would increase customer stickiness and significantly improve the use of economics. The prize of being the leading financial technology company in South Africa, targeting under-served customers is greatest if executed with focus and consistency. Net 1 has better placed than any other business in the country to unlock that prize.

We are looking forward to the journey ahead. With that operator, we're happy to open it up to Q&A. .

Thank you very much sir. [Operator Instructions] The first question comes from Raj Sharma of B. Riley..

Hello! Good morning. I have a few questions.

Just starting off of Ali’s, talking about the assets and technologies in South Africa between the businesses, are you missing any access of technology? Should we expect the company to make any acquisitions or does network largely have all that you need to grow your core business and then I have a couple of others. .

So yes, good morning. I guess I should answer that. So Net 1 largely has all of the assets and technologies required to execute upon the strategy. As I said, there is three areas that it could augment its capabilities in. One of those areas is in the last mile distribution in the micro merchant space.

The other one is – there is a pricing benefit if you are able to access the national clearing settlement arenas for acquiring ATM and accept deposits. That would be facilitated by a mutual banking license. I think the further I touch on this is clearly a relevant and fresh brand.

I think that each of those, the first two predominantly can be addressed by acquisition, but do not have to be addressed by acquisition. .

Right. And then just going off the need for a mutual banking license, does that play into the plan that you have to submit the filing with the SEC.

Would that require additional capital? Could you talk a little bit about that? You know if you were to – since your proactively trying to satisfy the requirements of the Investment Act, what would that sort of imply? Would that mean you know you’re going to take on more of a majority stake or is there a plan that you would divest some of the minority investments? How does – can you help us just understand how you foresee that playing out?.

Well, I’ll just comment on this Ali. I think in the way the Investment Company Act classification works, obviously the more operating assets that we control, the better in terms of having a clear site of your classification under the Investment Company Act.

So if we were to take control of another business for example, it would push us into a better position in terms of that Investment Company Act classification.

Obviously it depends on a multitude of variables, so it's not a straightforward calculation necessary, but you know at the moment under the Investment Company Act, cash is regarded as a neutral asset and if you can convert cash into controlled operating assets, then that helps significantly in terms of how you'll lead under the Investment Company Act.

Is that alright?.

So, does that – does this imply – what does it tell you about your strategic direction? What does that tell us about your strategic direction? Does that mean you are trying to become an investment company, you know do you foresee that classification coming through or – I'm just trying to understand what’s the direction in the specialty if you want to grow your South African business and most likely possibly need a mutual banking license.

Would that then fairly put you in the investment company category?.

No, it’s more likely to assist us in making sure that we’re not an investment company under the Investment Company Act.

So the plan is that you know we regard ourselves as an operational business non-investment company, and investing in our South African business and lifting its fair value would naturally help to fix the Investment Company Act that we have at the moment. .

Right.

And can you talk about the timelines for this process? Do you think that this – how long do you think this takes, the determination?.

It's about – really there’s no fixed timelines unfortunately, so we can't really unfortunately give a lot of clarity on the timelines.

As we said, we're in the process of submitting an application and after that, because I understand that it's really a process that the SEC would then run through and as I said, there aren’t any fixed timelines around it..

Right, thank you. And then what my last question is, what did the strategic review – I guess what did the strategic review view yield in terms of the non-strategic assets, you know MobiKwik Bank Frick, Ceevo, the Carbon.

If not strategic can investors, assume that they would eventually be divested?.

Ali, can you pick that up or do you want me to?.

Sure. I’m happy to do it. I mean I think that the most important change for the operations outside of South Africa is that the board has taken a decision on to exit the Ceevo business. The business has been significantly cash flow negative since inception and doesn’t have material operational losses.

For the purposes of prudent capital allocation, the board deems next to the business is the obstacle path. We will look at all of our strategic investments in the coming months. We have no specific plans to divest into those. All of the other operations will be assessed on a case-by-case basis. .

And on the same token, you might decide to up your state in any specific not-strategic asset. Is that fair that you might increase your investment or divest some. .

So, I mean I think that the fact that we are focusing our interests on South Africa and that, that is our strategic priority, which means that surely it will be through that lens that the capital allocation committee will be looking at any potential opportunities. .

Yeah, I’ll take my questions – I'll take this offline. Thank you so much. .

Thank you. The next question comes from David [inaudible] Southside Capital Management. .

Hi! Hope you can hear me?.

Yeah, loud and clear..

Okay, great. Yeah, good afternoon and thank you very much for the call. Yup, maybe if I could just try to pry a little bit just from the previous questioner. I mean Finbond is practically disclosed that they are looking to sell the SA operations. You know how is that – I'm kind of drawing the line here to your mutual banking license in here.

How is it influencing you know what’s your strategy going forward and you’re thinking going forward? The second question I had is, some of the other bank holdings or holding companies of banks, the regulator has started to impose some extra regulatory burdens and perhaps capital burdens, which is meant – they’ve spun off these banks.

Have you had this conversation with the rate, the South African regulator, that’s I guess is also faltering into this investments, holding company criteria for the SEC. Has this also been an issue and has this come up in your thinking. Maybe you could elaborate on that. Thank you. .

Maybe just, just framing the question a little bit – the reference to a mutual banking license is not a precondition of the strategies, not a necessary condition. Having a mutual banking license could provide additional strategic benefits, but it’s certainly not the changing item.

Just to contextualize that, the path in which they could be pursued, that is the most fairest; there’s no one particular direction of travel. I’ll let Alex make a comment and see if he has anything specific to say with respect to Finbond’s South African regulator. .

Yeah, we certainly haven’t had any conversations with the regulator and I think a part of any decision that we make around our mutual banking license would include you know assessment of what are the associated costs and the regulatory requirements with that.

So you know at this point it’s really too early to talk about how that might influence the situation. You know we do have a lot of regulated entities within the South African group anyway; we have the insurance company; we have a couple of FSP licenses, so we’re not a stranger to the regulated environment anyway. .

Okay, and so if Finbond is looking to sell their South African operations and you're not going to follow on, how does that impact your strategy, them not having that kind of distribution based accredit. .

We don't really utilize their distribution base to originate credit at this point anyway. We do have some cooperation and collaboration arrangements, but they're relatively small in terms of – and relatively recent and we really don't see them – see those relationships as critical in terms of you know growing our financial services business. .

And sorry, my last question. So then is that, then am I reading you correctly that Finbond doesn't play a funding benefit to you, more a distribution benefit.

What – then could you maybe talk about what that benefit is?.

Are we talking about Finbond today or…?.

Yes, Finbond today..

At the moment we just have – we have an investment into – a successive investment in Finbond. We do collaborate in certain areas as I said, so there is a little bit of cross setting, but it's relatively small.

We don't sought any funding from Finbond and we are providing some services and some – particularly IT services to Finbond, but there is no real – what’s the right word, cross benefits at this point with them..

Okay, thank you very much..

[Operator Instructions] The next question comes from Dennis Captain [ph] of Captain Equity Analysts [ph]..

[inaudible] Hope you can hear me?.

You’re very soft Dennis. .

Okay, Alex and Ali thanks for the presentation, I really appreciate it. Two questions from my side.

Number one, given that your focusing on South Africa, would you be keeping your NASDAQ listing? And number two, with regards to the ZAR150 billion of TAM, is most of that Greenfield opportunity that hasn’t been tapped or do you have to take market share away from others?.

Maybe I’ll, I could start with – this is Alex. So I’ll start with the second question. The TAM that is represented there represents the TAM as it exists today. The green – so if you like, that pie you would be taking from others.

However, the total addressable opportunity if you were to include the expected growth of the market as a consequence of digitalization would be a larger TAM. So you could generate revenue both by taking share and also by driving the market.

Clearly as Net 1 is also operating with under-serviced customers, there is material opportunity to drive the market, and then a lot of these verticals there is limited competition. In terms of the, first question, Alex I don’t know if you want to have a go. .

Yeah, I mean I don’t think the NASDAQ listing is up for discussion at all. I think we don’t see any change in that position at all. .

Thanks. I appreciate the answers. .

The next question comes from [inaudible]. .

Hi! Thanks for taking my call. I have some questions on the restructuring of Cell C.

Yeah, other investors are optimistic that they can recover some of the value, some of the investment, and I wanted to know how evolved are you in the restructuring process of Cell C? And do you think you can recover some of the investment? And do you have any time lines that you can guide us on when this will be completed?.

I could take those questions on Cell C. We are involved to a degree in terms of that we are obviously a 15% shareholder and have board representation of Cell C, but we are not actively driving that recapitalization process from our side.

We're always hopeful that we'll be able to recover something out of the original investments, but as you've seen from our financials, we’ve written that investment down to zero. You know we certainly think there is a business there if we get the capital structure right and that would be valued and that would be realizable out of it.

In terms of timelines, I’m afraid I can’t shed any further life on timelines other than – and everyone’s working very hard to expedite that process and complete it as quickly as possible. .

I appreciate your answer, but I just want to push back a bit.

You know everyone is obviously hoping to recovery some money, but how realistic is that hope? Why are you hopeful?.

I think, you know as I said there is a strong core business there, and this is more of a balance sheet structuring issue in terms of where Cell C is and if that balance sheet can be right sized in terms of its structure, then there is no reason why the underlying performance can’t come through and deliver some value. .

But as an equity holder, I mean obviously we are thinking that the bondholders would take a quite a significant hit, which means that the equity holders will be wiped out.

Am I misunderstanding the restructuring process, and why do you think equity will have value?.

That will all come out in the detail of recapitalization when its announced in terms of how that is structured. When you bring the investment down to zero, you know there is no doubt that any sort of value would be welcome. .

Okay, buy you – have you had any site. The rumors that the term sheets are out.

Have you had any site of it?.

Nick hi! This – Nick, this is Dhruv. I think we are just clouding up the call for the rest. So I would recommend you you know pointing these questions to either Cell C or to Blue Label, because we would like to address some of the other areas. I think Alex has said what we can, publically. .

Yeah, I’m just trying to, you guys are – it’s an important part of the valuation process of the company, so.

No, its valued at zero, so....

No, no that’s the accountants’ valuation. I mean I need to determine the value, whether we can recover that valuation and I’m just asking you, other investors are very hopefully and you guys are hopefully.

I’m just want to know why are you so hopeful and whether you’ve had site of it, any term sheets or anything?.

I think some of that borders on material, non-public information. But I’m happy to have a conversation with you offline and we can facilitate a call with you and the Blue Label and Cell C teams. .

Okay, thank you. .

The final question comes from P.J. Solit of Potomac Capital Management. .

Hi, good morning. Thanks for the strategic plans. Obviously over time, if you're successful in implementing these plans and becoming a profitable fintech company in a large market, you want be valued in terms of half of cash investments at that point.

So obviously there should be some urgency to take advantage of the opportunity to implement a buyback and take advantage of that now.

I guess can you share any more thoughts on that and any more thoughts on the time line in terms of when was the SEC submission made? Is there any guidance or any dialogue back and forth or do we just need to sit and wait?.

Hi P.J., unfortunately there’s very little sort of clarity we can give on timelines. The application has not been formally submitted. I think it’s close, but not actually submitted at this point.

But and then once we are in and formally applied, then we don’t really have a great deal of insights into how long it will take to get a resolution on the matter. So it’s very difficult unfortunately to give you any guidance on timelines, but we’ll continue to do all we need to do from our side to expedite the process. .

P.J., its Dhruv. Just add to that point – yeah, just to add what Alex was saying, so I mean there is a parallel right. There is, one is the application and clarification from the SEC, which Alex has addressed.

But there’s also the other side, that if we build the business operationally, then we could self-cure that problem or drastically improve the ratios, and that is within our control and that is where we're trying to focus on in parallel. .

Okay, and is it realistic to think that you could self-cure in the next couple of quarters here in calendar 2020 or is that too aggressive. .

I think that’s probably a little..

Is it even possible?.

It’s probably a little big aggressive in terms of a self-cure. I think it would probably be into third and fourth quarters of this fiscal. .

And the other round of going through the SEC, digital cancelled right into Calendar 2020 resolution could be a possibility in that rout?.

I think a remote possibility I think is the advice at this point. .

Okay. Is there a scenario in fact a council as well where if you have the pathway and the visibility on one or both of those pathways, that you could start some form of capital return before actually getting entirely there. .

We haven’t had that discussion yet with the council. .

Got you. Okay, thank you. .

Thank you. Ladies and gentlemen, that was the final question. Thank you for joining us on the Net 1 UEPS Technologies Incorporated conference call. You may now disconnect your lines..