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 are likely to pursue the same prepaid platform for the provision of water.

This emerges as Blue Label joint CEO Mark Levy says the South African government aims 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 [prepaid] electricity, you are [eventually] going to have 18-million households with [prepaid] water meters,” he says.

The prepaid electricity segment, contributing 10% to group profit, is 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 are steadily migrating into the prepaid realm, as prepaid services allow greater control over municipal debt, assist consumer budgeting and provide opportunities for merchants to profit from virtual products.

Levy points out that, in certain regions, one is 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 they are “in the cycle”, the adoption will be rapid, as municipalities could roll out installations simultaneously and communities would adapt faster as they are already “educated” in the prepaid process, having been introduced to prepaid electricity systems years ago.

Levy also points out that prepaid electricity meters generated only 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 says.