Blue Label turns to SAB

• Group’s new campaign and distribution team to lift performance in informal market

Blue Label Telecoms has hired a team of distribution specialists from South African Breweries to spearhead its push into the informal market, management says.

Blue Label Telecoms has hired a team of distribution specialists from South African Breweries (SAB) to spearhead its push into the informal market, management says.

“There is a massive campaign inside Blue Label, the first of its kind for the past eight to 10 years … which is a strategy directed entirely at the mass market,” co-CEO Brett Levy said on Thursday.

Blue Label, a distributor of airtime, prepaid electricity vouchers and other electronic products, planned to add “about 150,000 to 200,000 points of presence” over the next three years.

“This is not a wild number we’re throwing out there. We have a clear strategy dealing with a hub, a bigger independent store, and then moving down into what you call a spoke, which is the hundreds of thousands of spaza shops and shebeens. The team running this for us is a team that came almost directly out of SAB.”

When SABMiller was acquired by Anheuser-Busch InBev, a number of senior SAB staff left the brewer.

“We were fortunate enough to get six or seven of these people. No one understands the rule of independent markets better than SAB,” Levy said.

Wayne McCauley, a former sales and distribution director at SAB, joined Blue Label as chief operations officer for SA in 2017, along with other former SAB and Coca-Cola staff.

Blue Label said on Thursday group revenue for the six months ended November 2017 rose 2% to R13.5bn, or 10% when including sales of “pinless topup” products.

Core headline earnings more than doubled to R1.36bn thanks largely to Blue Label’s share of profits in Cell C of R928m, the bulk of which related to the recognition of a deferred tax gain. Cell C’s deferred tax asset, which is worth R1.92bn, resulted in an R865m gain for Blue Label via its 45% stake in the mobile operator.

Cell C has a further R2bn to R3bn in deferred tax assets, which will be realised in future reporting periods, Blue Label management said.

“The only way that you’re entitled to use these deferred tax assets, especially of this magnitude, is if the auditors agree that the [Cell C] business model is sustainable,” co-CEO Mark Levy said.

“What should give the market solace is that we had their auditors, KPMG, and ours, PwC, verifying that the model is sound and sustainable enough to utilise that asset,” Levy said.

Blue Label’s share price surged 14.93% to close at R13.55.