How Much Money Is Mr Price Making From Telecoms?

Mr Price
cellphone. Photo by Andrea Piacquadio from Pexels

South African retailer Mr Price, which uses cellular handsets and accessories to drive footfall traffic into its stores and online platforms, reported strong growth from its telecoms segment in the year to end-April 2021.

The company said online traffic increased 65.7%  in the year to end-April 2021, with 86.4% of this traffic generated from mobile devices, placing the brand firmly in the hands of its customers.

Today, the JSE-listed retailer reported that its Telecoms Business grew 11.6% to R862 million in the year to end-April, driven by cellular growing 35.9% and gaining 90 basis points (bps) of market share according to GfK.

Double-digit sales growth in cellular (handsets and accessories) and intentional mix changes in Mobile Virtual Network Operator (MVNO) contributed to the total Telecoms GP margin increasing 30bps.

Mr Price runs its mobile virtual network operator on struggling cellphone operator Cell C’s network since 2014.

The Telecoms Business sells cellular products and services.

Historically, the Telecoms businesses have been reported within the Financial Services and Cellular segment, with revenue being treated as other income.

However, due to the growth in the Cellular business and the nature of the sales, management believes that it would be more appropriate and more meaningful to users of the financial statements to reflect the handsets, accessories and airtime sold by the Cellular business within the store environment as retail sales rather than other income.

The group reported that diluted headline earnings per share (HEPS) increased 1.9% to 1 049.0 cents. On this same basis, the second half of the year diluted HEPS of 672.0 cents was 13.2% higher than the corresponding period last year. HEPS is South Africa’s main profit gauge. This is a significant improvement on the first half of the year, particularly considering that level three lockdown restrictions and load shedding disruptions inhibited sales during this period.

Group CEO, Mark Blair, said these results are commendable when considering that we were forced to close all stores in April 2020 and yet maintained pro­tability at a similar level to the previous year.

“Full-year 2021 was a year like no other and I couldn’t be more pleased with the way that our business model has proven its resilience in the midst of extreme uncertainty and how our people adapted to the unprecedented demands placed on them by the pandemic.”

1 COMMENT

  1. Mr Price has a massive reseller business. They sell Vodacom, MTN, Cell C contracts.
    Isn’t this revenue and profit from that business. Never seen their Mr Price SIM in store.

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