Blue Label Telecoms has posted interim results for the period to 30 November 2018.
It recorded revenue of R12,3-billion, with effective gorss revenue increasing by 7% when “PINless top-ups”, prepaid electricity and ticketing are included.
The group saw an increase in gross profit of 15% to R1,31-billion, and increase in gross profit margin from 8,37% to 10,63% and an increase in EBITDA of 13% to R872-million on exclusion of the SPV adjustments.
It also posted an increase in core headline earnings per share of 3% to 55.13 cents on exclusion of Cell C and the SPV adjustments; and has cash resources of R940-million.
The core Blue Label business excluding Cell C and SPV revaluations delivered an increase in core headline earnings of 19% to R510-million. The business has remained resilient in a tough South African economy.
In the last six months to November 2018, the business has focused on the integration of recent acquisitions, efficiencies and economies of scale. The hub & spoke strategy is bearing fruit as Blue Label aggressively targets informal market expansion.
Technology is continuing to evolve towards a unified and integrated platform to both reduce costs and propel customer service and product development. This is aided by big data analytics which improves Blue Label’s ability to both up- and cross- sell.
Core headline earnings for the six months ended 30 November 2018 equated to a negative 11.39 cents per share, post a dilution resulting from the issue of additional shares to facilitate part-payment of the acquisitions of Cell C and 3G Mobile as well as the negative impact of the fair value downward adjustment of R493-million relating to the derivative instruments on the SPVs.
The interim results for the comparative period ended 30 November 2017, incorporated the Group’s share of profits in Cell C of R928-million, inclusive of the recognition of a deferred tax asset of R865-million. This was a once-off recognition to earnings in that period. During the current reporting period, the group’s share of losses in Cell C equated to R123-million.
The route-to-market expansion by Blue Label Distribution into the rural areas and townships is expected to continue its momentum in the further deployment of vending outlets, affording customer convenience and significant savings in transport costs.
Starter pack sales which generate compounding monthly annuity revenue continue to grow in these rural and township localities. The distribution of both high end and affordable low-cost handsets continues to exceed expectations with further inroads into the wider Africa market.
Cell C has concluded a binding term sheet with the Buffet consortium in terms of which Buffet shall, subject to the fulfilment of certain conditions precedent, become a minority shareholder in Cell C. With Buffet’s support the Cell C balance sheet will be bolstered and ensure Cell C’s sustainable growth for the future.