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segmental reviews
Kwikpay SA Distributes virtual prepaid airtime, electricity vouchers and value-added services through multi-application and managed terminal vending solutions and integrated POS till points for SPAR, FNB, Nedbank and Clicks. Virtual Voucher Distributes virtual prepaid airtime through an integrated prepaid voucher management system to over 500 Engen petroleum sites across South Africa. During the financial year, the group acquired Crown Cellular, a wholesale and retail distributor of virtual prepaid airtime servicing the informal market. The group purchased the balance (10%) of Ventury’s equity from its minority shareholders. Ventury is now a wholly owned subsidiary. Performance review The Telecommunications Distribution segment significantly exceeded its financial targets for the financial year. This enhanced performance resulted from strong local demand for prepaid airtime as well as the recent alignment of group subsidiaries with specific strategic goals. This strategic alignment has resulted in organic growth, primarily derived from subsidiary-specific market sector specialisations and performance goals, including the sharing of segmental sales, IT and treasury resources and operational costs. The creation of market specialisations has improved the segments’ overall market penetration whilst also significantly closing market gaps and successfully identifying new market opportunities. The group’s robust, scalable and easily deployed distribution and technology solutions have allowed for the rapid but well controlled rollout of additional local proprietary touch points. This has also contributed to growth in the segment wholesale and retail customer base during the review period.
The group’s ability to offer its end-users increased access to numerous e-tokens through an ever expanding footprint has provided resellers with greater convenience and availability when accessing products and services offered by the group. This leads to better end-user customer retention and loyalty. Prospects for 2009 The Telecommunications Distribution segment expects to maintain its position as the preferred provider of e-tokens and multi-application distribution solutions to wholesale and retail consumer markets in South Africa. These markets will benefit from the segment’s aggressive market penetration strategy that will both enhance end-user access to multiple technology solution offerings and various new e-token offerings. Current channel participants are also expected to benefit from aggressive customer acquisition and retention programmes as well as integrated access to other value added products and services. Although the segment remains well positioned to seamlessly deploy new and varied non airtime-related prepaid products and services into the group’s existing footprint, growing the relative contribution of non airtime-related products and services to overall group revenue and profit remains a key segmental priority for the forthcoming financial year.
SharedPhone International (SharedPhone) SharedPhone operates a SIM-card mobile payphone solution that allows vendors in rural areas – including other African countries – to offer consumers access to a public payphone and also vend prepaid airtime and prepaid electricity. Content Connect Australia (CCAus) In order to enter the mature and established Australasian market, the group established, together with a local partner, Content Connect Australia, an aggregator of localised content to mobile operators and third-party clients throughout Australia. The group will leverage its investment by increasing the range of e-tokens it distributes in Australia within the forthcoming year. Post year-end events Oxigen The group increased its stake in Oxigen, its Indian associate by 3,85%, equalling Microsoft’s 38,85% shareholding. Ukash A developer of proprietary and patented prepaid cash voucher technology; provides the group with access to a footprint in Western Europe and its innovative technology which allows for online redemption capabilities of multiple products and services through a single prepaid voucher. Blue Label Mexico The group jointly established Blue Label Mexico with Nadhari S.A. de C.V., a Mexican company with strategic and operational emerging market product and service development expertise. Blue Label Mexico will pursue opportunities complementary to the group’s current areas of business and is an important step in the group’s goal of creating a transaction-based distribution network in the emerging markets of Latin America, one of the world’s largest remittance corridors. Performance review Within the International Telecommunications segment, the loss from Oxigen of R19,6 million was predominantly due to the costs related to the aggressive rollout of POS devices. Oxigen’s unique value proposition as a centralised channel for e-tokens which are able to be conveniently distributed through rural POS devices has begun to gain significant traction. Although growth of Oxigen’s footprint has become more structured, it is not anticipated that Oxigen will be profitable by the group’s next financial year-end. In the DRC and Mozambique, APS has grown by developing its infrastructure and joint distribution channels, evidenced by month-on-month growth in total starter pack connections. Prospects for 2009 Subsidiary and associate companies within the International Telecommunications Distribution segment are strategically aligned to consolidating the group’s footprint in certain existing markets and aggressively growing its footprint across two geographic areas. Africa Following a period of consolidation, the group expects new pan-African telecommunications operators to emerge within the next 36 months, providing further scope for the group to leverage its strategic relationships and deployment methodologies to grow its African footprint through which to distribute e-tokens. Latin America Many Latin American countries don’t currently cater for “super” distribution channels that provide combined access to multi-application distribution solutions and a single source of varied e-tokens. The formation of Blue Label Mexico, in conjunction with experienced local operators, will position the group to rapidly deploy its footprint and distribute e-tokens to the whole region. In conclusion, increased distribution of the group’s full
e-token product and service suite through its growing
global footprint is expected to generate additional
revenue and profit.
Performance review The Technology Platforms segment has delivered pleasing results for the financial year. The segment’s focus on consolidating the group’s existing IT systems into a best of breed, stable and robust platform and the enhancement of its ability to integrate and enable third-party technologies has significantly entrenched the group’s overall standing within the secure e-token and transactional product and services sector. The ongoing development and customisation of the group’s e-token, PIN generation and redemption platform has allowed the segment to evolve into a customer centric value added solutions provider, well placed to meet current group and third-party requirements and to respond appropriately and timeously to new market developments. The segment is committed to providing open platform technology solutions where possible and ensuring that customers are retained through superior client service. A key achievement for the review period remains the successful standardisation and packaging of complex platforms into standard products that will enhance the group’s speed to market and ability to aggressively deploy its footprint within new emerging and developing markets.
Prospects for 2009 The Technology Platforms segment will continue to focus on developing, deploying and supporting commercially viable and functionally rich transaction engines, providing end-to-end customer and business specific technology solutions for the group and its third-party customers. 2009 will see further segmental investment in software development, business intelligence, Enterprise Resource Planning systems and service orientated architecture technologies. The segment’s main focus for 2009 will remain the development of group IT infrastructure, the creation of proprietary products and services and the ongoing integration and enablement of the group’s wholesale and retail footprint. In conclusion, the ongoing standardisation of system
deployments and the optimisation of group-wide
technology investments, through the sharing of group
IT infrastructure, are expected to significantly enhance
the segment’s economies of scale.
Performance review Significant contributors within the Other Related Services segment at all levels are Datacel and Cellfind. A strategic decision was made to substantially increase the number of seats in the call centre operations due to the expansion of products and services through this medium. The cost pertaining thereto impacted to a degree on managements’ original expectations for their performance for the year. Having said this, the resultant foundation that has been built has manifested itself positively post the balance sheet period. Cellfind remains a steady profit contributor with a continued increase in its subscriber base from month to month. Customer retention is vital in subscription-based business models and both Datacel and Cellfind have focused on improving their customer service levels, new product development and sales and marketing efforts during the review period. Key acquisitions during the financial year have resulted in Datacel becoming a significant BPO business with the critical mass, diverse business focus and specialist skills required to attract and secure key national blue-chip customers. Prospects for 2009 The Other Related Services segment is well positioned to grow its LBS and aggregated content subscriber bases. Whilst Cellfind remains focused on retaining and growing its current Vodacom subscriber base, its enhanced product and service offerings will soon include:
In addition, the imminent launch of MTN’s LBS product and service offering will significantly enhance Cellfind’s subscriber base, both growing its market share and leveraging its fixed cost base. Datacel’s innovative offerings and national reach are expected to ensure the retention of current customers and acquisition of future customers. Coupled to a solid annuity revenue base, the company is well positioned for future growth. As part of its African expansion strategy, CCA is currently signing new, independent artists with strong local and regional appeal. Prefueled, in association with several key partners will be merchandised throughout key locations across South Africa. In conclusion, the relative contribution from proprietary and third-party database telemarketing, subscriber-based LBS and aggregated content to the group’s revenue, is expected to grow significantly.
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MSC provides mobile product and service solutions
to the group’s direct-to-consumer and business-tobusiness
channels. MSC, in conjunction with Microsoft,
recently launched mibli, its first mobile public offering.
mibli is a mobile eco-system combining numerous
services into one “on-phone” application supported by
an array of shared back-end components. MSC has
developed a number of revenue channels for mibli,
these include: unique targeted advertising, premium
services and e-products, airtime sales, partner
placement and white-labelled services.
