Prepaid distribution company Blue Label Telecoms is terminating its Nigerian business, after the Multi-Links contract was cancelled last November, all but wiping out international profit in the first half of the year.
Blue Label says the cancellation of the Multi-Links deal has impacted the “viability of the business in Nigeria”. As a result, the listed company will focus its efforts on other emerging markets.
The company's move contradicts joint-CEO Mark Levy's statement in February that Blue Label was moving ahead with its Nigerian strategy and expanding its existing footprint by adding more operators to its network.
This morning, Blue Label said it was pulling out of the country. Levy says: “This will enable Blue Label to redeploy resources to our other international businesses, in particular India and Mexico.”
Blue Label operates in SA, India, Mexico and Nigeria, and also has a small operation in the UK. The company provides prepaid vouchers for airtime and other products such as electricity.
Ongoing legal battle
Last November, Blue Label's Nigerian unit threatened legal action over lost profit, because the 10-year “super dealer agreement” was cancelled early after Telkom decided to exit the struggling Multi-Links CDMA business.
Blue Label has a 36.72% stake in Africa Prepaid Services (APS) Nigeria through its 72% ownership of APS, which owns 51% of the Nigerian company. APS distributes bulk printed physical prepaid products and starter packs.
APS Nigeria's contract with Multi-Links allowed it to acquire customers for Multi-Links' CDMA network, as well as sell and market the range of Multi-Links' CDMA service and products for an exclusive period until December 2018.
Blue Label is still quantifying the damages claim, after which the matter will go to arbitration. It doesn't have any timelines for when the issue may be resolved.
Multi-Links defended its decision to cancel its contract, last year saying there were a number of contractual breaches by Africa Prepaid Services Nigeria.
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