Blue Label pumps $6.1m into Mexico ops

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JSE-listed prepaid voucher distributor Blue Label Telecoms has extended financial assistance worth $6.1 million to its Mexican unit.

The loan, equivalent to about R50 million, will go towards expanding points of presence in the country as Blue Label and its partner, bakery Grupo Bimbo, roll out infrastructure, a process that is currently accelerating.

The venture's target market is 700 000 “mom and pop shops” in Mexico, which are reached through 17 000 truck routes, leaving from 300 depots. Blue Label's aim is to sell airtime wherever bread is retailed.

Blue Label and Grupo Bimbo are accelerating the roll out to around 6 000 new outlets each month.

Last month, Blue Label said its share of the loss from Mexico for the year to May came to R25 million. Blue Label has 40% of the company, with Grupo Bimbo owning another 40%, and the balance is held by management.

Equal stakes

Joint-CEO Mark Levy said a month ago that losses are expected to continue for about the next 18 months, as it rolls out point of sale devices. He adds that Grupo Bimbo is the world's largest bakery and has operations in 17 countries.

The financial assistance is in the form of a loan that will either be repaid or converted to equity at some stage. Grupo Bimbo is contributing an equal amount.

Blue Label, which turned over R18.7 billion in the year to May - a 4% gain - ended the period with R1.98 billion in cash, after spending R800 million. Blue Label says the payout was advanced to fund its pro-rata contribution towards the working capital requirements of Blue Label Mexico.

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