Blue Label Returns To Profit After Turbulent Years

The group said it remains committed to its back-to-basics approach in order to ensure the reduction of debt and improved cash generation.

Blue Label Telecoms: Mark and Brett Levy
Blue Label Telecoms: Mark and Brett Levy

JSE-listed technology group Blue Label Telecoms has returned to profit for the first time in years, buoyed by Cell C write down.

The company has lost 80% of its value over the past two years due to its investment in struggling Cell C.

The group, which owns 54% of struggling mobile phone operator Cell C, and Net 1 have written down to zero the value of their stake of the embattled mobile network which last year reported an R8 billion loss in the year to June, hit by impairments.

Consequently, Cell C’s financial results did not have an impact on Blue Label’s earnings for the current reporting period.

In the half-year ended 30 November 2019, Blue Label reported a 2% rise in revenue from continuing operations to R11.5 billion and a 10% growth in gross profit to R1.21 billion.

The group’s net profit from continuing operations amounted to R313 million, from a prior loss of R201 million.

Earnings per share and headline earnings per share (HEPS) increased from a negative 15.11 and 17.54 cents per share to a positive 34.83 and 39.98 cents per share respectively. HEPS is South Africa’s main profit gauge.

The group said it remains committed to its back-to-basics approach in order to ensure the reduction of debt and improved cash generation.

“Traditional airtime and data remain the group’s majority contributors. A determined focus on enhancing our non-telco product portfolio and electricity capability now sees these business lines contributing 43% of the group’s gross profit,” the company informed investors on Friday.

“We will continue to develop our technology stack together with new products to drive future growth.”

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