JSE-listed Blue Label Telecoms, which retails prepaid vouchers, is targeting a market of a million outlets that retail less than R25 000-worth of prepaid items a month.
The group, which yesterday released its interim results, has developed a low-cost point of sale device that is in trial phase. Joint-CEO Brett Levy says the company will bolster its gross profit through targeting smaller merchants, which do not have any other way of selling such prepaid vouchers.
Blue Label was founded 10 years ago and has been listed on the JSE for five years. It currently has 85 units on trial and the average turnover per unit is R7 200 a month.
Previously, the company did not have a mechanism to address outlets that were doing between R1 000 and R25 000-worth of prepaid sales a month, says Levy. The company has since developed a low-cost point of sale device that will launch on 1 March.
The device is targeting a total market of a million outlets, although Blue Label thinks it is possible to sign up between 10% and 20% of this market, says Levy. Blue Label currently has more than 150 000 points of presence in SA.
Bottom line gains
The group reported a 2% increase in turnover, to R9.5 billion, in the six months to November, but Levy points out that more of its transactions are becoming PIN-less, in which it acts as an agent. As a result, he says, Blue Label does not count the value of the vouchers sold as revenue, but rather the commission, which improves its bottom line.
Levy says PIN-less sales grew from R7 million a year ago to R411 million in the first half. Blue Label connects 450 000 people with SIM cards each month, and 14% of its PIN-less sales are from blue chip retailers, with the rest coming from so-called "mom and pop" outlets.
Blue Label ended the period with cash on hand of between R500 million and R700 million, and spent R1.5 billion bulking up its inventory at discount prices, which also adds to its bottom line. Its gross profit improved to R644 million, and headline earnings per share on a normalised basis gained 26%, to 34.78c.
Electricity sales also continued to contribute to the company's bottom line, as commissions gained 29%, to R53 million, in the first half. Currently, there are about nine million prepaid meters, although Blue Label sees this growing to around 16 million in the next few years.
Levy says, in the next three to five years, 90% of all products that can be sold via prepaid vouchers will be offered through that option, and 90% of all seven billion people on the globe will have bought at least one item through prepaid.
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