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Investment proposition

We have built a strong and entrepreneurial business model based on the lasting appeal of prepaid products and services for cellphone users across all LSMs in South Africa, India and Mexico; and are expanding into the rest of Africa and other global spaces. Our strength lies in our ever-growing global footprint of touchpoints in our virtual and physical distribution channels in these markets.

The appeal of prepaid to consumers:
  • More choice in how to pay for products and services – prepaid or pay-as-you-go
  • Easy budget planning: consumers choose what they spend on, and control how much they spend
  • Cash based transactions remove the need for credit checks
  • Virtual and physical top-ups as when the user needs them
  • Prepaid products and services are sold across a broad footprint of traditional and non-traditional outlets
  • Consumers with little or no access to bank accounts can access prepaid products and services in any area, at any time that suits them, and with a variety of payment options
The appeal of prepaid to suppliers:
  • Prepaid means cash up front and guaranteed payment
  • No need for debt collection and no risk of bad debts
The appeal of prepaid to merchants:
  • We give you access to over 150 000 points of sale that include everything from major retail chains to spaza shops; and we continue to expand our footprint across India and Mexico
  • Multiple products can be sold from any one device, meaning multiple revenue streams from a relatively small retail space
  • Virtual delivery means no need to manage physical stock
Our business model has strengthened since listing and we continue to grow our footprint and generate cash on a significant basis, even during recession periods

From strength to strength
  • Our business was founded in 2001 by entrepreneurial thinkers and commercial implementers; and was restructured and consolidated ahead of its 2007 listing
  • This listing, in November 2007, raised R1.3 billion
  • Governance and compliance were strengthened
  • Low gearing since listing
  • The company’s growth has been at a time when there has been a global shift in consumer transactional behaviour from credit to debit to prepaid terms
  • We have focused on the high-volume, low-margin, distribution and sale of prepaid products and services – both physical products and services, and virtual products and services
  • We leverage favourable working capital management
  • Our typical market is in emerging and developing economies, with an emphasis on the world’s unbanked and underbanked consumer
  • We enable access to prepaid products and services that were previously out of reach for lower LSM groups
  • Strong barriers to entry for competitors include entrenched relationships, vendor lock-up through systems integration, and the ubiquity of our POS and our proprietary technologies
  • We have long-term contracts with mobile network operators
  • We have long-term relationships with participants across seven main distribution channels
  • We hold approximately 60% of the South African prepaid airtime and about 50% of the prepaid electricity market
  • Our proprietary technology is developed and maintained in-house
  • We monetize our existing footprint by offering additional value added services
  • We process over 5 billion transactions per annum
  • We have a robust CSI programme
  • We have a creative, youthful and talented management team
Strong cash generation
Our business is cash-generative and revenue is derived as follows:
  • Revenue via our wholesale, retail and merchant distribution footprint:
    • sales of prepaid airtime - virtual and physical, for voice and data
    • prepaid electricity and water
    • tickets for events, sports and transport
    • insurance and other financial and value added transactional services
  • Trading and annuity revenue from sale of starter packs, their activation and ongoing utilisation
  • Annuity revenue from subscription-based services
  • Interest income derived from a combination of high revenue volumes and favourable trading terms
  • Our dividend policy
  • Our capital expenditure relates mainly to point-of-sale devices
Robust growth footprint
  • The licensing of our technology is an alternative to equity investment
  • We are expanding goods and services offerings in South Africa: prepaid electricity, prepaid water, ticketing, loyalty programmes, bill payments, debit and credit card acquiring, money transfers
  • We replicate our business model in other emerging markets, particularly India and Mexico
  • We impart our offerings and learnings across our global footprint
  • We have established systems and infrastructure through our airtime offerings, therefore the costs of new products and of growth decrease incrementally
  • We have both organic growth prospects and prospects of growth by merger and acquisition
  • Our growth is funded from internal cash flows
Skilled executives who think like entrepreneurs
Brothers Brett and Mark Levy, our co-founders, remain integral to the current management team. Our top teams are highly experienced in digital commerce and in all aspects of pay-as-you-go markets.

Key distribution contracts with local network operators and major retail chains
We have transparent long-term agreements, including favourable payment terms, with network operators and major retail chains in South Africa, India and Mexico.

Proven financial performance and stable cash flow
Our revenue and profitability are steadily increasing and have done so for the past five years. For the period ended 31 May 2016, the Group reported pro forma revenue of R26.2 billion and a net profit after tax of R731 million (2015: R578 million).

Ongoing and targeted product differentiation
We believe that any product or service that can be remitted or transmitted digitally will become prepaid, sooner or later. We are uniquely positioned to converge this evolution, bringing customers closer to the point of purchase and benefiting from any increased volume distributed via our footprint, at a minimal incremental cost.

Company synergy across our group
All companies in the Blue Label Telecoms Group are expected to benefit from the strategic competitive advantage provided by access to our proprietary technology, as well as from the enhanced economies of scale and additional efficiencies of being part of a global business.

MEET Our Team

Mark and Brett Levy, Joint CEOs

Our Board


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Company overview
  Our business  Key facts  Vision, mission & values  Welcome to Blue Label - Corporate Video
Strategy
  Strategic and operational highlights  Global footprint  The Board

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