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BLUE LABEL INTEGRATED ANNUAL REPORT 2015
SOUTH AFRICAN DISTRIBUTION
This business segment distributes prepaid
products and transactional services to
the South African wholesale and retail
markets, covering a diverse distribution
footprint reaching all LSM groups.
Its product range includes prepaid
airtime, electricity and water, starter
packs and data, event and transport
ticketing and financial services that
include merchant acquiring.
South African Distribution contributes
98% to Group revenue.
Overview
As the leading distributor of prepaid airtime and
electricity in South Africa, augmented by an
expanding suite of products and services, this
segment is well positioned to supply its customers
through its widespread POS network of
approximately 150 000 devices. Distribution
capabilities range from independent stores,
wholesalers, petroleum forecourts, spaza shops and
Mom & Pop stores, through to numerous banking
outlets and the multi-channel retail chains.
The informal sector contributes approximately 85%
to South African Distribution’s revenue. Services to
rural areas are facilitated by a fleet of trucks
accompanied by footsoldiers. In this direct
distribution model, innovative transactions and
incentives are implemented, value is added directly
to the consumers, in turn solidifying relationships
with merchants.
The remaining 15% of revenue is derived from the
formal corporate and retail sectors, in which the
Group continues to capitalise on its base. During the
year agreements were concluded that will afford
greater access to new distribution channels. The
acquisition of RMCS in 2014 has enhanced the
reach into the retail channel. By managing the front
end of retailers’ businesses, ensures that the full
suite of Blue Label products and services is available
to consumers at these outlets. Distribution to urban
merchants is supported through the Group’s
proprietary technology platforms.
The trend in consumers opting for “PINless or direct
top-up” as an alternative redemption method for
prepaid airtime, continues to escalate. During the
past year sales through these means increased from
R1.7 billion to R2.7 billion.
Airtime and
starter packs
Prepaid airtime, starter packs and data
Prepaid airtime, starter pack and data sales continue
to comprise the majority of this segment’s profits.
The Group’s prepaid airtime products are
differentiated in the market, as they include
community-based and customised benefit starter
packs, such as healthcare cover and insurance
policies for accidental death and funeral plans.
Prepaid airtime sales are augmented by voucher
sales that are utilised for data downloads and other
online data products. Merchant acceptance of
low-cost POS terminals and “business in a box”
continues to gain momentum.
The importance of a targeted approach is that
starter packs are distributed to market in a strategic
manner which maximises activation which in
turn results in a monthly compounded annuity
revenue stream.
The Prepaid Company is the leading distributor
of prepaid products for all the major network
operators. It facilitates, manages and maintains the
distribution of the group’s bouquet of products and
starter packs, including the distribution of
approximately 80 million bulk print vouchers per
month. These services are supported by proven
proprietary technology, which ensures purchasing
efficiency and inventory control. Relationships with
each of the network operators are key to the
success of this business. It is responsible for supplier
agreements and procurement for the Group,
wholesale and community sales, starter packs,
handsets, tablets and facilitating its merchants with
bulk airtime printing capabilities. Group treasury falls
under its ambit.
OPERATIONAL OVERVIEW