Blue Label firing on all cylinders

Revenue increased 25% to R12.9 billion.

Blue Label Telecoms, the JSE-listed company in talks to buy a 35% stake in mobile operator Cell C for R4 billion, has turned in a strong set of results for the six months to November 30 2015.

Headline earnings rose by 25% to R355 million on the back of a similar improvement in revenue to R12.9 billion.

Cash and cash equivalents, meanwhile, leapt from R694 million to R1.5 billion.

Blue Label, which is led by co-CEOs and brothers Mark and Brett Levy, said the strong performance was the result of organic growth, underpinned by an expanding distribution channel and growth in market share.

Internationally, the group’s share of losses in Blue Label Mexico declined by 28%, albeit equating to a share of losses of R32.5 million, which impacted negatively on headline earnings per share by 4.88c.

Oxigen Services India has remained profitable from year-end, focusing on expanding a valuable mobile wallet subscriber base, it said.

The group said talks to buy into Cell C are ongoing. “Management are of the opinion that should the transaction be completed, it will be compelling both from an investment and commercial perspective,” it said.

Meanwhile, its partnership with retail Edcon to develop a network of retail technology stores across South Africa is also gaining traction.

Last year, Blue Label said the two companies would invest R300 million in rolling out Edgars Connect stores over 24 months. Blue Label holds 51% of the joint venture, with Edcon holding the remaining 49%.

Edgars Connect has come about as a result of Blue Label’s R314 million acquisition of Retail Mobile Credit Specialists (RMCS), which designs products and services that connect to Edcon’s backend systems. RMCS has been merged with another Blue Label company, The Prepaid Company, to create Blue Label Connect, which will work with Edgars to roll out the stores. 

“The strategy to enter into an initiative with the Edcon group relating to standalone Edgars Connect retail stores is expected to gain momentum through the establishment of additional outlets,” Blue Label said on Wednesday.

“This initiative has created an ideal platform for Blue Label Telecoms to complement its strategy of the inclusion of marketing its products and services on a retail basis.”

Blue Label declared an interim dividend of 31c/share, up from 27c/share a year ago.

This article was first published on TechCentral. To access it click here.

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