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Blue Label Telecoms delivers strong earnings growth

A boost in revenue growth and strong organic growth, helped Blue Label Telecoms to deliver a 21% rise in core headline earnings per share (HEPS) to 102.85 cents in the year to end-May 2016. HEPS is South Africa’s main profit gauge. By Staff writer

The JSE-listed telecommunications group said revenue rose 19% to R26.2 billion and growth profit was up 11% to R1.8 billion.

Revenue generated on “PINless top-ups” rose by R1.4 billion from R2.7 billion to R4.1 billion, equating to effective growth in South African distribution revenue of 23%, in that only the commission earned thereon is recognised.

Brett Levy and Mark Levy, joint CEO’s of Blue Label Telecoms, primarily attributed the company’s performance  to organic growth, underpinned by an expanding multitude of distribution channels, and in turn a growth in market share.

The R12.3 billion company increased its EBITDA (earnings before interest, tax, depreciation and amortisation) by 15% to R1.2 billion and also rewarded shareholders with a 36 cents a share dividend, reflecting a 16% increase compared to the previous year.

Blue Label Telecoms is a reseller of prepaid mobile and electricity vouchers with operations in South Africa, India and Mexico.

The company is also in talks to buy a strategic stake in mobile phone operator Cell C.

The firm reiterated that its participation in the recapitalisation of Cell C by way of subscription of shares is progressing positively. “Management are of the opinion that the transaction is compelling both from an investment and commercial perspective.”

On the international front, Blue Label Telecom’s share of losses in Blue Label Mexico dropped by 28%, from R89 million to R63 million. A negative contribution of R27.7m from Oxigen services India (OSI) was congruent with significant expenditure incurred on the expansion of its mobile wallet subscriber base.

The company said new initiatives at Blue Label Mexico, including the escalation of starter pack distribution, will contribute to a reduction in losses that have arisen from its aggressive roll out strategy.

Oxigen Services India will focus on enhancing its mobile wallet subscriber base, with increased marketing to the vast unbanked population in India. The firm said this will result in growth in transactional revenue and the intrinsic value of the wallet subscriber base, which has accumulated to 22.6 million active wallets at present.

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