Operational overview - International segment

The strategy of the International Distribution segment is to pursue growth opportunities for Group and third-party products and services across its global footprint, by systematically rolling out points of presence, in a replication of the proven South African business model. International operations comprise Blue Label Mexico and Oxigen Services India.

Blue Label Mexico (BLM)

Blue Label Mexico (BLM)

The business in Mexico encapsulates a number of agreements with key participants in the sales and distribution channels, including the major network operators and the world’s largest bakery, Grupo Bimbo, a joint 47.56% shareholder with Blue Label in BLM.

The project to expand the distribution network across Mexico progresses steadily with some 75 000 terminals now installed. BLM’s strategy is to redeploy underperforming devices, while enhancing terminal activity by driving additional product and service transactions through its Red Qiubo terminal base.

The range of products and services on offer through BLM’s technology platform includes PINless recharge, bill payments, cash collections, card payments acceptance with Citibanamex as the acquirer and Visa as a strategic partner, as well as digital food vouchers. During the year the uptake of SIM cards, which generate monthly compounded annuity income, gained momentum.

Blue Label’s share of losses for the year continued to narrow, amounting to R63 million (2015: R89 million loss), consistent with judicious management of overhead costs, increasing revenue and the improvement of gross profit margins. The latter was attributable to BLM becoming a multi-carrier distributor for all networks.

Oxigen Services India

Oxigen Services India

India’s fintech economy continues to expand rapidly, as it embraces the country’s financial inclusion imperatives. In turn, Oxigen is evolving into a two-part business, of product distribution in the offline environment and payment solutions and financial services to online mobile internet customers.

Since inception, Oxigen’s focus has been on expanding its offline network of retail outlets, currently underpinned by approximately 200 000 POPs. Main products include mobile top-ups, data card recharge, satellite TV recharge, bill payments, correspondence banking and domestic remittances.

During the year, the Reserve Bank of India awarded Oxigen a licence to connect to a centralised bill payments and settlement system (the Bharat Bill Payments System), enabling it to access large numbers of pan-India billers, for payments in categories such as utilities, telephones, insurance and taxes. Recently, Oxigen launched the Aadhaar Enabled Payment System at micro-ATM terminals, enabling customers to remotely cash-in/out on cardless transactions by utilising their Aadhaar ID numbers as authentication. In furthering convenience for customers, Oxigen has connected to Immediate Payment Service (IMPS) of NPCI, an instant 24/7 interbank electronic funds transfer service.

In aligning with the dynamic expansion of India’s fintech economy, a strategic decision was made to enter the online wallet market. Although offline retail-based wallets continue to increase, acquiring additional wallet subscribers through online channels has the potential of compounding transactional revenue. These wallets also have an intrinsic value based on worldwide trends. At financial year-end, Oxigen Wallet supported 23 million subscribers, an increase of 18 million from the prior year. In order to attract and retain wallet subscribers, in both offline and online ecosystems, significant developmental, marketing and advertising spend is required.

Recently, the virtual Visa card was launched, enabling wallet users, who do not have a debit or credit card, to transact by creating their own multi-or-one time Visa card. The interoperability of a large number of virtual prepaid Visa cards on the Oxigen platform opens up the online merchant websites in accepting the Oxigen Wallet.

As at July 2016, Oxigen transacted approximately USD4 million per day in money transfers, up from USD3.3 million per day in the prior year. Transfers, in turn, are conduits for remittances. The market potential for both domestic and international remittances is estimated at over USD100 billion, with 7% growth compounded annually. Currently, India is the top remittance receiving country in the world at USD70 billion, ahead of China, the Philippines, France and Mexico.*

Blue Label’s share of losses for the year equated to R28 million (2015: R2.6 million profit).
Source: *World Bank

Oxigen now reaches 200 000 merchants, supports 25 million wallets, touches 150 million unique customers, underpins over 600 million transactions per annum in off- and online environments, and has processed over 2.5 billion transactions.