Joint CEO's report

Mark Levy, Joint CEO


Brett Levy, Joint CEO

The Blue Label Telecoms Group has been successful in delivering on its back-to-basics strategy during the year ended 31 May 2020. We have restructured the business to focus on core operations through the sale of the Blue Label Mobile and 3G Handset divisions and discontinued the retail operations of WiConnect.


The Blue Label Telecoms Group has been successful in delivering on its back-to-basics strategy during the year ended 31 May 2020. We have restructured the business to focus on core operations through the sale of the Blue Label Mobile and 3G Handset divisions, discontinued the retail operations of WiConnect and impaired goodwill and loans where required. The core operations have performed well and demonstrated their resilience during the COVID-19 lockdown period with interest-bearing debt declining by R917 million to end the financial year at R2.3 billion. Our balance sheet is now very healthy, given that EBITDA produced by the Group was R1.2 billon on exclusion of extraneous costs and net cash generated by operations amounted to R1.3 billion.

Cell C

The 2019 financial year was a very difficult one for the Group, given the necessity to impair our entire investment in Cell C.

We understand the frustration of all stakeholders for the protracted tenure relating to the Cell C recapitalisation. The recapitalisation is an extremely complex process given that we are interacting with several stakeholders who all have competing interests on the outcomes they would like to achieve, namely the Chinese banks and equipment suppliers, United Kingdom, USA and Lebanese bondholders and Lebanese and South African banks. We are confident that we are nearing the end of this mammoth task, which is progressing well and we will update stakeholders in due course.

Completing the Cell C recapitalisation is key to our strategy. We embarked on this recapitalisation programme in order to ensure that Cell C will be in a position to continue operations. This is imperative not only to potentially recoup our investment therein as well as continuing to distribute its offerings which form an integral element of Group profitability.


In spite of having to adjust to the COVID-19 pandemic, we are both incredibly proud of Blue Label and all its staff for the determination evident in their expedient adaptation to the lockdown regulations, remote working and the incredible innovation that they have produced in servicing our customers. New products and services were launched during this period, thereby ensuring continuous support to the consumer in terms of meeting their airtime, data, electricity and financial services' needs in addition to enhancing our digital advancements. The Group's digital expertise has enabled uninterrupted access to all of our products and services through banks, formal retailers, independent retailers, petroleum forecourts and spaza shops across South Africa. Interestingly, we have noted an increase in the productivity of our people as they strive to continue delivering innovatively.

COVID-19 has, however, negatively impacted certain divisions within our Group. Ticketpro has been severely affected, given the fact that no transport ticketing could take place during hard lockdown and event ticketing remains on hold until relaxed legislation permits reversion to normality. We have, however, applied ourselves during this period to re-engineer our systems and processes and to build innovative new platforms. In this regard we have recently launched an online streaming events' platform, namely COVID Zero, in order to maintain relevance and to provide artists and their following with a platform to share and enjoy content safely. COVID Zero empowers entertainers and raises funds for charities to provide the less fortunate South Africans with face masks, hand sanitisers and food parcels. In November 2020, we intend to launch South Africa's first truly all-in-one fan-based "experience" platform, through which we will be providing online streaming, cashless payment solutions, wireless event-based connectivity and NFC transport technology, ensuring safer and secure commuter travel.

We also made the difficult decision to discontinue our retail store operation, WiConnect. Lockdown had a devastating impact on trading and the uncertainty of the duration of the pandemic led to this decision. We have closed 71 standalone stores and will only confine our retail efforts to a store-within-a-store approach in the future. COVID-19 also had a negative impact on our starter pack, gaming and call centre operations.


Our strategy for delivering returns to shareholders remains the RITE strategy – Reach, Innovation, Trust and Efficiency. We will focus on ensuring that Group debt will be maintained within acceptable parameters.

We are aggressively growing our distribution presence and bouquet of products and services, particularly in the banking and informal markets. The Group's driving philosophy remains extending financial inclusion and convenience to all South Africans. Securing exclusive ticketing products and offering revenue assurance and revenue protection to municipalities differentiates us from our competitors. We will focus on increasing Comm Equipment Company's finance book by utilising its bespoke methodologies and capitalising on its strong cash conversion capabilities.

Our international operations have not performed according to expectations and accordingly we have disposed of our 47.56% interest in Blue Label Mexico for a consideration of USD11.5 million. Management in Oxigen Services India continues to source a potential investor, which if successful will result in the disposal of the whole or part of our interests therein.

Our intention is to focus our efforts on the South African distribution businesses and to deleverage the business in order to ensure a more robust and liquid balance sheet going forward.

Blu Nova is now the leading practitioner of data and decision science in South Africa and given how many of our products overlap and the billions of transactions we complete annually, the opportunity to capitalise on our rich data is patently clear.


Technology is Blue Label's lifeblood and our digital prowess has always been our key strength and served us well in navigating the COVID-19 lockdown period. There has been enormous effort put into our technology over the 2020 financial year. We are accelerating innovation, go-to-market strategies and digital enablement. After all, we are fintech specialists enabling financial inclusion through platform innovation. By entrenching our entrepreneurial culture and agile practices, our ability to execute on strategic growth objectives has significantly improved.

Information technology security, risk and compliance are essential to Blue Label and our customers. We have concentrated specifically on scalability and platform refactoring. We have also invested in substantially enhancing our redundancy capabilities for improved stability and business continuity. In this regard, active-active was deployed with transactional success rates and uptime increasing to beyond 99% and transactional volume growth sustained at over 20% per annum, while there has also been a 71% reduction in production defects from prior years. Our increased cybersecurity investments have resulted in a zero negative impact and provided a reliable ecosystem of platforms across our landscape.


Our gratitude to our staff is unlimited. We have been awed by their flexibility, innovation and drive to continue offering the very best to both Blue Label and its customers.

Our Board has supported us in what has been a difficult journey, given the negative impact that Cell C has had on our Company to date as well as having to navigate through the COVID-19 pandemic.

In conclusion, we have successfully navigated through the COVID-19 pandemic with a positive outcome. Simultaneously, we have focused on our back-to-basics strategy on our core businesses with the objective of continuing to expand our network of distribution points of presence in conjunction with enhancing our product offerings. We are confident that these initiatives will have a positive bearing on the Group during the current financial year.

Mark Levy

Brett Levy

Joint Chief Executive Officer Joint Chief Executive Officer

23 September 2020