Blue Label H1 results exceed expectations

24th February 2016

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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JSE-listed Blue Label Telecoms achieved a 25% increase in headline earnings a share to 53.26c for the six months to November 30, which the company said was its best growth since listing in 2007.

The company, which was in talks to buy a 35% stake in Cell C for R4-billion, also reported a 17% increase in gross profit to R919-million, while its revenue increased 25% to R12.9-billion.

Joint CEO Brett Levy said the 25% growth was “massive”, as, over the last year, all cellular networks had experienced negative market conditions and only anticipated growth of 6% to 9% a year.

He added that, while there were a “still a few hurdles to go through” in terms of finalising the acquisition of a 35% interest in Cell C, the deal was expected to realise on June 1. He assured that the company was not looking to sever any ties with telecommunications operators Vodacom and MTN.

“Our stake in Cell C is operating in an entirely different way than with the other networks. We now have an interest in a network,” he noted.

Joint CEO Mark Levy reiterated that the company would not breach any agreement with the other operators. “It will be business as usual,” he said.

While Blue Label’s local operations fared well, it was the company’s Oxigen Services India business that showed the biggest growth. The business had recorded losses of R700 000 in the first half of the prior financial year, but reported profits of R2.8-million for the six months under review.

The business was now focused on increasing its wallet subscriber base to grow revenue.

“India and China are sleeping giants, with consumers looking to be more active in this space and it is only through access to technology that they will be able to do more,” Mark Levy said, adding that the company currently had about 200 000 point-of-sale devices in India.

Meanwhile, the company reported a 28% narrowing in losses for its Mexico operations, from R45.2-million in the prior half-year to R32.5-million in the six months to November 30, which was expected to continue in line with the division’s roll-out of prepaid starter packs.

In the year ahead, Blue Label was aiming to expand its Edgars Connect initiative, together with the Edcon Group, which would see a further roll-out of the standalone retail stores. The group expected the roll-out to gain momentum, but Brett Levy noted that this had been going slower than expected.

Currently, there were 51 stores nationwide, short of the targeted 75. “We are a little behind schedule . . . but we are looking to open about eight stores a month,” he said, attributing the slow uptake to finding the right lease for the 40 m2 retail space.

He further noted that the next area for growth would be in the introduction of prepaid water meters to private residences. The meters would replicate the prepaid electricity model and bill by volume, rather than value.

“Prepaid water in the next three to four years will be full-steam ahead,” he stated.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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