Blue Label Telecoms (BLT) ? which is in the process of buying a large stake in Cell C ? saw interim revenue grow by 25% to R12.9 billion.
The JSE-listed company says headline earnings per share (HEPS), for the six months to 30 November 2015, were also up by 25% to 53.26c.
Blue Label says the performance was attributable to organic growth, underpinned by an expanding distribution channel, and was "in spite of a challenging economic environment". This as headline earnings for the half-year came in at R355 million, a 25% improvement on a year ago, while gross profit rose 17% to R919 million.
The positive results come as the company prepares to gain control of 35% of telecoms operator Cell C.
"Management are of the opinion that should the transaction be completed, it will be compelling both from an investment and commercial perspective," according to the company.
In December last year, the companies announced plans for Blue Label to buy a 35% stake in Cell C for R4 billion. The investment is part of a recapitalisation plan for SA's third-largest mobile operator. The restructuring is still subject to regulatory approvals but is expected to come into effect in June.
BLT's share price has risen almost 155% in the past five years and over 35% in the past 12 months. The market seems to like the latest set of results, as the share price gained over 2% on the news and was worth R12 a share by mid-morning.
Challenges abroad
Blue Label Mexico continues to be a drag on earnings and pulled down HEPS for the period by 4.88c. The group's share of losses in Blue Label Mexico, however, did decline by 28% but still equated to a share of losses of R32.5 million.
"The decline in losses incurred by Blue Label Mexico is expected to continue in line with its rollout of prepaid starter packs, which is gaining momentum on a monthly basis. Furthermore, its decision last year to become a multicarrier distributor has clearly manifested itself in an increase in melded gross profit margins," the company adds.
The previously loss-making Oxigen Services India remained profitable from year-end and is focusing on expanding a valuable mobile wallet subscriber base. There was a turnaround from the group's share of losses of R700 000 in the comparative interim period, to a share of profits of R2.8 million, after the amortisation of intangible assets.
BLT intends to continue its strategy of marketing the benefits of prepaid wallets to the vast unbanked population of India.
"Growth in the base will not only increase revenue via transactional fees but will simultaneously enhance the underlying value of Oxigen in terms of market-related values per subscriber."
Local is lekker
Growth in BLT's South African distribution revenue of 24% was organically achieved through increased sales by expanding distribution channels. The company says it has enhanced its bouquet of products to include mobile handsets and tablets.
"Low-cost smartphones are expected to reach a wider spectrum of consumers, which in turn will enhance the sale of prepaid tokens of value."
Revenue generated on "PINless top-ups" increased by R641 million in the six months, to R1.8 billion. Net commissions earned on the distribution of prepaid electricity also continued to increase, escalating by 20% to R95 million, on turnover of R6 billion generated on behalf of the utilities.
Core net profit in SA increased by 13% and EBITDA grew 14% to R578 million.
During the period, Blue Label granted a R32 million loan to Edgars Connect as it continues its rollout of standalone Edcon stores across the country.
Blue Label announced the joint venture with Edcon in its full-year results last August. At the time, joint-CEO Brett Levy said the companies would invest a combined R300 million in Edgars Connect over the next two years. Blue Label owns 51% of the joint venture, while Edcon holds the remaining 49%.
"This initiative has created an ideal platform for BLT to complement its strategy of the inclusion of marketing its products and services on a retail basis," the company adds.
The development of Mobile Money Transfers in SA is in its final stages and implementation will soon commence.
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