As airtime sales come under pressure, Blue Label is looking to add new products to its distribution network, while continuing to invest in its international operations.
Joint-CEO Mark Levy says the group is wary of what is happening in the telecoms market, as consumers come under pressure with rising fuel prices, interest rates and e-tolling in Gauteng. "Something's got to give."
Levy says Blue Label's offerings are a necessity and not a luxury, but the group needs to be mature enough to know the market will change. He notes the group is adding to its product range and hopes to gain back what it may lose in other areas.
Blue Label bought Mobile Credit Solutions last December, for an initial price of R307 million, and says this will give it access to new distribution channels and add a strong retail footprint.
The group is looking to bolster its airtime offerings by bundling them with DVDs, extending financial services through acquisitions and commercial agreements, and expanding ticketing through its Ticketpros unit, notes its presentation.
Levy says Ticketpros brings welcome competition to the sector, which is dominated by Computicket.
New avenues
Challenges in the environment create opportunities for the company, notes Levy. He says aggregators will win the day, as providing services such as airtime and electricity top-ups is complex and vendors would rather outsource that function.
Blue Label, which reported revenue down 4%, to R9 billion, ended its first half with R1.3 billion in the bank. In the six months to November, the group grew headline earnings per share 7%, to 37.15c, and gross profit to R710 million.
Levy explains 3% of the revenue decline was due to the shift to PIN-less top-ups, for which Blue Label earns commission, which aids its profit, but not its top line. Its PIN-less revenue gained R310 million.
Blue Label is focusing on better business rather than on its income line, says Levy. He notes the group could easily add another R2 billion to revenue, but it is not worth doing business for just 1c. "Turnover is vanity."
Levy says although the company is looking to add new products to its range, it does not want to expand its international operations beyond Mexico, India and the UK. Its share of the loss in India was R3.5 million, while its Mexico operation cost it R31 million.
Its Indian operations were affected by currency conversion costs, says Levy. He notes its remittance business is becoming bigger than its telecoms offering and the group wants to be more financial services-oriented.
Levy explains there is less competition in the remittance space, although the market has accepted the way to move money around is through wallets. He says the group is doing about $400 million in domestic remittances each year. "Every day it's growing."
In Mexico, the group had a slowdown in rolling out point-of-sale devices, but has since picked up speed again and now has 68 000 units in the market.
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