Sales from prepaid electricity will begin to overtake revenue from airtime sales for Blue Label Telecoms, a listed giant in the multibillion-rand local distribution of products that include event tickets, prepaid electricity and airtime.
The firm reported yesterday that revenue grew just 1 percent to R18.9 billion for the year to May from sales of prepaid airtime, commission from the distribution of prepaid electricity and annuity income from selling SIM card starter packs.
The firm said this flat performance excluded the R820 million increase in sales of PIN-less airtime. If these were included then revenue would have grown by 6 percent.
Blue Label Telecoms earned 51 percent of its airtime revenue from Vodacom, 36 percent from MTN, 12 percent from Cell C and 1 percent from Telkom. Cell C’s share gained 2 percentage points in the year while MTN decreased by the same amount, after Cell C introduced a 99c a minute tariff. MTN was the slowest to react to the competition from Cell C.
“I think consumers out there are seeing value for the first time,” Brett Levy, a joint chief executive of Blue Label Telecoms, said.
Commission earned on the distribution of prepaid electricity jumped by 33 percent to R113m as Blue Label generated revenue of R7.2bn for electricity suppliers.
Of the approximately 270 municipalities in the country, only about 50-odd allowed third party electricity vendors. “But that is changing,” joint chief executive Mark Levy said.
The company is closely monitoring the growth of the prepaid meter market, which is expected to balloon to 14 million households from 9 million over the next two years. Eskom controls about 50 percent.
Blue Label’s subsidiary in India, Oxigen, which provides payment solutions, reported a loss of R600 000. The firm’s business in Mexico would only become profitable in the 2015 financial year as losses continued while Blue Label deployed point of service terminals across the network of its partner Groupo Bimbo, Mark Levy said.
Blue Label’s gross profit jumped 6 percent to R1.3bn during the year under review. Headline earnings a share jumped 17 percent to 64.17c, after excluding a once-off income receipt of R79.4m. The headline earnings growth was the result of an increase in gross profit margins to 6.70 percent from 6.45 percent on the revenue for the 12 months.
The company said negative earnings before interest, tax, depreciation and amortisation of R31m were largely related to the costs incurred on the ongoing court battle related to the repudiation of the contract between Africa Prepaid Services Nigeria and Multi-Links. Africa Prepaid Services Nigeria is a Blue Label subsidiary and launched arbitration proceedings for a claim of $457m (R4.6bn). Multi-Links counterclaimed for $123m. Telkom sold the firm to Hip Oils Topco on October 3, 2011. The arbitration will start in February. The parties are also involved in a court battle over an abandoned application by Telkom.
Blue Label Telecoms shed 4.32 percent to close at R7.75 yesterday. - Business Report