Blue Label Telecoms posted a trading update yesterday, alongside an announcement it is pursuing options in Mexico.
Blue Label CEO Brett Levy says the venture into Central America will rival its investment in Oxigen, its associate company in India.
"We can't announce who our partners in Mexico will be yet, but investors will be very excited and surprised when we release that information," says Levy.
"There will be a small upfront investment and the rest will be piecemeal. The total investment will be substantial over time."
He says the company chose to expand in India because of the number of people in Mexico keeping large amounts of "cash under the mattress". The term refers to money that is not transacted through financial institutions.
"Globally, there is around $301 billion changing hands outside the banks and Mexico happens to be the biggest transmitter of this kind of financial transaction," notes Levy.
The progress
The business presence in Mexico is an important step in the group's goal of creating a transaction-based distribution network in the emerging markets of Latin America, the company said in its announcement.
"Blue Label Mexico will serve as a platform for the sale and distribution of secure electronic tokens of value, including Microsoft products, services and advertisements, pursuant to the strategic relationship between Blue Label and Microsoft."
The Mexican arm will also play in the country's telecommunications space, which Levy says is four or five times bigger than SA's.
"Senior members of Blue Label's South African management and technology teams are actively involved in the introduction and implementation of Blue Label business strategies, processes and technologies in Mexico."
Financials
Meanwhile, Levy is pleased with the company's performance since it listed on the JSE in November last year.
The group anticipates an increase of between 20% and 30% for headline earnings compared with its initial forecast and pre-listing statement.
The company attributes this and other performance increases to an "increase in consumer demand for prepaid airtime; and effective asset management, including the successful application of cash raised on listing and cash generated through operations has enhanced the group's liquidity and ability to generate revenue".
The report indicates the group also generated additional finance income caused by the increase in interest rates.
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