Blue Label, Cell C in integration plan
Blue Label Telecoms plans to integrate some of its products with those of Cell C in a bid to expand the network operator’s portfolio and introduce new services to its subscribers.
Blue Label Telecoms plans to integrate some of its products with those of Cell C in a bid to expand the network operator’s portfolio and introduce new services, such as mobile money, to its 28-million subscribers.
The JSE-listed prepaid airtime distributor has reached an agreement to buy a 45% stake in Cell C for R5.5bn.
Speaking after the release of half-year results, Blue Label joint CEO Mark Levy said on Tuesday that Cell C provided value for the group and that small operators generally gave more margins. The group was positive it would make a return on its investments and “extrapolate value out of the company.”
On Monday Blue Label announced a revised deal with the introduction of a new investor that has proposed paying R2bn for a 15% stake in Cell C. The announcement also includes an agreement that was reached with Cell C’s debtors to convert their debt into equity.
The deal has come under heavy criticism from Cell C’s black equity partner, CellSaf, which has threatened legal action in a bid to block the deal.
There is speculation Blue Label may lose its contract with Vodacom. Blue Label distributes prepaid airtime and SIM-cards for mobile network operators.
Joint CEO Brett Levy said the contract with Vodacom still had four-and-a-half years left and there was no talk of termination. “We remain loyal to all customers,” Brett Levy said.
In the six months to November, Blue Label grew revenue 3% to R13.2bn as a result of the expansion of distribution channels. Headline earnings per share rose 54% to 78c.
Blue Label’s share of losses from Indian business Oxigen Services was R120m from a profit of R2.8m a year earlier. The major portion of these losses was attributable to substantial marketing spend and the acquisition of customers.
Blue Label Mexico losses declined to R44.7m, of which Blue Label’s share was R22.1m after the amortisation of intangible assets, from R67.4m. The decline in losses was achieved in spite of a 28% reduction in revenue caused by intense competition resulting in a drop in tariffs.
THERE IS NO TALK OF TERMINATION OF THE CONTRACT WITH VODACOM. WE REMAIN LOYAL TO ALL CUSTOMERS