Blue Label Telecoms Integrated Annual Report 2019

Blue Label integrated annual report 2019 15 ABOUT US 1 – 21 LEADERSHIP 22 – 29 PERFORMANCE 30 – 73 GOVERNANCE 74 – 120 SHAREHOLDERS’ INFORMATION AND ADMINISTRATION 121 – IBC SUPPLIER RELATIONSHIPS (NETWORK OPERATORS AND UTILITIES) INCLUDING CELL C Each subsidiary is highly dependent on its respective suppliers to achieve its business objectives. There is a risk of customers (aggregators) with significant footprint in market dealing directly with the utilities. This can result in a loss of revenue as our customers become competitors. In addition, there is a potential for network operators to launch applications whereby consumers are granted direct access to airtime purchases. Top management continues to maintain a good track record with existing suppliers and to strengthen relationships. Long-term contracts remain in place with suppliers, ensuring sustainable business. POTENTIAL THEFT OF E-TOKENS OF VALUE Our business has been strengthened by the high-volume, low-margin distribution and sale of e-tokens of value. E-tokens are a form of electronic cash used for secure transactions. The potential theft of e-tokens of value and the increased threat of cybercrime need to be closely managed to ensure that virtual stock is not susceptible to theft or corruption of voucher pins. Confidentiality, integrity and availability of the virtual stock is managed through role-based access control, secure transfer of supplier/customer files and encryption with Hardware Security Modules (HSMs). OPTIMISATION OF B-BBEE COMPLIANCE The challenge is to maintain and continuously improve on the B-BBEE contributor status level and scoring for the Group and all its subsidiaries. Our objective is to meet the procurement requirements and market demands of our customers so that we are able to remain competitive, especially where our trading or business-facing subsidiaries are concerned. Furthermore, we are exposed to ongoing and unforeseen changes in the B-BBEE legislation. We have appointed a dedicated resource to head up Group transformation and to take ownership of Group B-BBEE. 8 9 10 UNETHICAL BEHAVIOUR AND FRAUD BLT has a zero tolerance towards fraud and irregularities with a requirement for all incidents to be investigated irrespective of the amount involved. In addition to cybercrime risk, the Group is susceptible to fraudulent activities. The business has been targeted with a few incidents involving internal and external perpetrators. This was due to relaxed operational controls which have since been improved upon. Plans are in place for the appointment of an internal fraud manager to build a more stringent and proactive approach to managing fraud. Fraud and ethics is reported on at the Group’s Social, Ethics and Transformation Committee as well as the Audit, Risk and Compliance Committee which feeds into the Board Committee. The KPMG hotline remains available for the anonymous reporting of any suspicions of fraud. 7