Listed electronic voucher supplier Blue Label Telecoms has had to shut down three call centres because of the recent global recession.
The company closed the CNS Call Centre and its Blue Label Call Centre units, which resulted in the closure of three call centres in total. Both subsidiaries specialised in insurance and cellular sales. The closure, during the year to May, led to more than 300 jobs being lost.
However, joint CEO Mark Levy says the company is leasing its CNS facilities, in the Free State, to other companies, and some jobs have been saved through this arrangement. He explains that the company has made CVs of affected staff available to companies leasing the facilities.
Levy says the other two cell centres, in Cape Town and Kimberly, were small satellite centres, and job losses were minimal. Closing the call centres cost the company R13 million.
Blue Label felt the pressure of the global financial crisis, especially in the financial services sector, says Levy. He says: “Overnight, you have the rug pulled out from under you.” However, the centres were not core to its operations, and the rest of the business is sustainable, Levy adds.
New horizons
The company, which listed in November 2007, yesterday reported its results for the year-to-May, and declared a maiden dividend of 12c a share thanks to robust cash flow of R516 million from operations. The company reported an 11% increase in revenue, to R17 billion.
However, earnings per share declined from 51.13c to 48.17c, while headline earnings per share dropped from 51.63c to 48.27c. Blue Label attributed part of the decline in earnings per share to impairment costs as a result of the negative performance of its call centres.
Blue Label will be unveiling new products, including money transfers, bill payments and prepaid electricity, to enhance its business model.
The company says the cash generative nature of its operations, zero debt and expansion programmes in SA, Nigeria, India and Mexico bode well for its continued growth. The company has laid the foundations for start-up operations in Nigeria and Mexico.
Its balance sheet at 31 May 2010 showed that cash and cash equivalents had increased to R2.05 billion. Levy says the company will continue to look for potential acquisitions, but will not “spend for the sake of spending”.
Frost & Sullivan ICT industry analyst Protea Hirschel says: “It has become clear that international expansion into several key markets is paying off as expected. The group has now built a solid base in Nigeria and India from which to continue revenue growth going forward, while judiciously disposing of underperforming assets.”
The company's shares closed 1.9% higher, at 430c yesterday, the day of the results announcement.
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