Blue Label joint CEO Mark Levy
As the trend of moving into a prepaid world continues, JSE-listed Blue Label Telecoms has started examining opportunities to enter the emerging prepaid water segment and replicate its successful prepaid electricity sales model.
On the back of the “phenomenal growth” experienced in the deployment of prepaid electricity meters, municipalities were likely to pursue the same prepaid platform for the provision of water.
This emerged as Blue Label joint CEO Mark Levy said the South African government aimed to grow the number of installed prepaid electricity meters in the country from the current 9-million to 18-million.
“That means if you have 18-million households buying electricity [through prepaid], you are [eventually] going to have 18-million households with [prepaid] water meters,” he said.
The prepaid electricity segment, contributing 10% to group profit, was Blue Label’s “star performer”, earning R79-million in commission in the six months to November 2014 – an 18% rise on the prior period – and equating to revenue of R5.3-billion on behalf of utilities.
Services provided by government were steadily migrating into the prepaid realm, as prepaid services allowed greater control over municipal debt, assisted consumer budgeting and provided opportunities for merchants to profit from virtual products.
Levy pointed out that, in certain regions, you were no longer offered a choice of prepaid or postpaid electricity, with meters already installed in millions of homes in South Africa and across the world.
While it may take years to deploy the water meters, once it was “in the cycle”, the adoption would be rapid, as municipalities could roll out installations simultaneously and communities would adapt faster as they were already “educated” in the prepaid process having been introduced to prepaid electricity systems years ago.
Levy also pointed out that prepaid electricity meters had only generated around R3-million in revenue in its first year, rising to R10-billion by the fourth year of operation.
“It is phenomenal and could be replicated with water meters,” he said.