Blue Label plans to add prepaid water to portfolio
BLUE Label Telecoms is adding prepaid water to its portfolio in a move that will further grow its prepaid business, which is one of the key contributors to group earnings.
Blue Label’s main business is the distribution of prepaid products including electricity and airtime, and distribution of cellphone starter packs.
Blue Label joint-CEO Mark Levy said the group was working with two small municipalities and expected to add more in the near future as more municipalities roll out water meters.
“Consumers are already educated about prepaid and there has been a lot of talk about this, so I don’t think it will be a hard sell.” But Mr Levy stressed that Blue Label’s role was to sell prepaid vouchers on behalf of municipalities and the firm did not set prices.
Blue Label’s net commissions earned on the distribution of prepaid electricity increased by R12m to R79m on revenue of R5.3bn generated on behalf of the utilities.
In the six months to November, headline earnings per share rose 15% to 42.7c.
This growth was achieved in spite of the group’s share of losses in Blue Label Mexico increasing by R14.5m, negatively affecting growth in headline earnings per share by 2.17c.
Revenue increased to R10.3bn from R9.07bn in the previous period.
The South African distribution business increased revenue 14%, predominantly through access to additional channels of distribution.
Blue Label’s operation in India, Oxigen Services, showed improvement compared with the previous period, thanks to its shift towards money transfer services. The business also provides airtime sales. Daily money transfer deposits increased from $1.2m a day to $2.7m.
Mr Levy is confident that Oxigen Services will become the largest money transfer provider in India.
Blue Label Mexico incurred losses despite revenue grow of 20%. The losses are attributed to continued margin compression and increase in overhead costs.
The company said the increase in overheads was necessitated by a continued roll-out of point-of-sale devices as well as ancillary support services.
Mr Levy expects the Mexico business to recover as it moves towards annuity businesses like the distribution of SIM cards.