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BLUE LABEL INTEGRATED ANNUAL REPORT 2016
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Operational overview
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 products
and services through its widespread
distribution footprint of approximately
150 000 devices. Distribution
channels range from Mom & Pop
stores, spaza shops, independent
stores, wholesalers, petroleum
forecourts to multi-channel retail
and corporate banking partners.
SA Distribution’s unique ability to
deliver both virtual and physical
product to an extensive distribution
footprint through a single company
with a proven platform across
different channels to market,
differentiates it as the market leader
in South Africa.
Products include but are not limited
to, physical products such as
hardware (POS terminals, handsets,
tablets and accessories), prepaid
starter packs and hybrid packages
and virtual products such as prepaid
airtime, prepaid data, prepaid
electricity, prepaid water, bill
payments, voucher products, gaming,
money transfers and ticketing.
The informal sector contributes
approximately 89% to SA
Distribution’s revenue, with the
remaining 11% derived from the
corporate and formal retail sectors.
In a drive to reach into and uplift rural
communities, SA Distribution utilises a
unique and diverse route to market
strategies. Solutions are facilitated
by a fleet of trucks accompanied
by footsoldiers, with further
opportunities available through
Start
your own Business
initiatives, which
include
bicycle trader
,
gazebo &
umbrella table
or the option of
purchasing
Business in a Box
from
sales agents or retail partners. In
addition, innovative incentives are
offered to retain merchants and
reward growth, which in turn, gives
SA Distribution further opportunities
to cross- and up-sell.
The trend in consumers opting for
“PINless or direct top-up” as an
alternative redemption method for
prepaid airtime, continues to escalate,
with sales increasing 52% to
R4.1 billion during the past year.
The majority of SA Distribution’s
revenue continues to be derived from
the sales and distribution of prepaid
airtime, data and starter packs.
Growth in sales is driven primarily
through the expansion of the
distribution footprint, complemented
by the increasing range of products
and value-added services.
SA Distribution’s prepaid starter pack
offers differentiation through
community driven SIM packs pre-
commissioned with community-
related added value and content.
All starter pack sales are tracked via
state-of-the-art tracking software and
systems to ensure effective and
accurate reporting. Flexible RICA
registration solutions allow merchants
to RICA SIM cards via a terminal, USSD
and online from a mobile application.
SA Distribution’s prepaid airtime sales
are predominantly voucher based and
utilised for redeeming voice/data
top-ups. Growth in prepaid airtime
sales has been further driven by
PINless/direct top-ups. The
chat 4
change
product continues to gain
momentum and has further
differentiated prepaid offerings in the
market.
The Prepaid Company (TPC)
The Prepaid Company is the leading
distributor of prepaid products for all
the major network operators. It
facilitates, manages and maintains the
distribution of all airtime and data,
including the distribution of
approximately 80 million bulk print
vouchers per month. In addition,
TPC activates approximately 700 000
starter packs monthly. Services are
supported by proprietary technology,
which ensures purchasing efficiency
and inventory control.
TPC is responsible for supplier
agreements and procurement on
behalf of the Group, including
wholesale and community sales,
starter packs, handsets, tablets and
bulk airtime printing. Group treasury
falls under its ambit.
South African distribution
The South African Distribution segment is the largest distributor of prepaid products and transactional
services in South Africa, covering both the wholesale and retail markets. The product range includes prepaid
airtime, data, starter packs, hardware, electricity, water, all forms of ticketing and financial services. These
products are supplied across a diverse distribution footprint reaching all South Africans, thereby achieving
the strategic objective of having core products and services within arm’s reach of urban and rural
communities.
The South African Distribution segment is the predominant contributor to the Group’s revenue and
profitability. The principal operating companies in this segment are The Prepaid Company, Blue Label
Connect, Blue Label Distribution, TicketPro, Cigicell, Edgars Connect and Transaction Junction.