Operational reviews

The Group's strategic intent is to go 'back to basics', improving efficiencies and focusing on our core services and geographies, and to improve cash generation to deliver returns to shareholders.

The review that follows provides detail on the operating activities of the Group's segments:

Africa distribution


Africa distribution's purpose:

To enable the fulfilment and upliftment of people in South Africa by being the leading distributor, providing a wide range of value-added products, services, and solutions, which we are continually enhancing and growing through ever expanding and convenient channels.

COVID-19 pandemic had a notable impact on many of our merchants and consumers. In addition, changes in consumer purchasing behaviour, which included a rapid adoption of digital channels at the onset of the pandemic, remains intact and we foresee that the trend will continue into the new financial year.

We have enhanced our customer value proposition by improving and expanding our customer interaction centre, which will enhance our informal market segment going forward.

Financial performance

Revenue generated by the continuing operations within the Africa Distribution segment declined by 11% from R20.9 billion to R18.6 billion. As only the gross profit earned on PINless top-ups, prepaid electricity, ticketing and gaming are recognised as revenue, on imputing the gross revenue generated thereon, the effective growth in revenue equated to 10% from R59.7 billion to R65.8 billion.

The Group continues to increase market share and bolster its product and services mix to defend and grow its positions in the market. Gross revenue generated on PINless top-ups increased by R4.2 billion (28%) from R15.0 billion to R19.2 billion.

Net commissions earned on the distribution of prepaid electricity amounted to R282 million. Revenue generated on behalf of the utilities increased by 18% from R22.7 billion to R26.7 billion.

Gross profit increased by R267 million (13%) to R2.33 billion, congruent with an increase in margins from 9.87% to 12.52%.

EBITDA in the current year included non-recurring income of R16 million attributable to the realised foreign exchange gain on the USD20 million SPV2 liquidity support. Extraneous costs in the prior year of R329 million comprised a fair value downward adjustment, an unrealised foreign exchange loss on the USD20 million SPV2 liquidity support, and impairments of goodwill.

On exclusion of the above non-recurring income and extraneous costs, and despite an anticipated increase in overheads of R127 million, EBITDA increased by R99 million (8%) from R1.26 billion to R1.36 billion.

Core headline earnings from continuing operations of R856 million included the non-recurring income of R17 million pertaining to foreign exchange gains on the USD20 million liquidity support provided to SPV2. The prior year core headline earnings from continuing operations of R617 million included the fair value downward adjustment, net of taxation, to the Glocell loan of R47 million and an unrealised foreign exchange loss on the USD20 million SPV2 liquidity support of R49 million.

On exclusion of the above non-recurring income in the current year and extraneous costs in the prior year, core headline earnings from continuing operations increased by R126 million (18%) from R713 million to R839 million.

The Prepaid Company (TPC)

The Prepaid Company (TPC)

TPC is the leading distributor of prepaid airtime, data, and starter packs on behalf of the main South African mobile network operators. Relationships with each of the network operators are crucial to the success of the business.

TPC is responsible for supplier agreements and procurement on behalf of the Group. These include wholesale and community sales, starter packs, handsets, tablets, and the fulfilment of bulk airtime printing capabilities to its merchants. The wholesale market is declining annually as customers shift their buying patterns from traditional airtime purchases to PINless top-ups. The COVID-19 pandemic accelerated this process. From an internal perspective, much of TPC's traditional formal retail customer base is now being managed by Blue Label Distribution (BLD) as the Group focuses on customer centricity.

The prepaid SIM market remains under pressure due to saturated market conditions and subscriber churn. We nevertheless continue our efforts to acquire new subscribers through strategic partnerships, focusing on direct-to-consumer activation and the rural landscapes within South Africa.

TPC's approach is to refine efficiencies, increase gross profit margins, and to assist BLD in expanding its informal market channel by specifically concentrating on community channels, stokvel groups, churches, and BLD's hub and spoke strategy. Our ability to design bespoke, value-for-money incentivisation products for these communities decreases churn.

TPC is pursuing a complete digital transformation of the wholesale model, with emphasis on a direct-to-consumer business model, to capitalise on the PINless offering.

Blue Label Distribution (BLD)

Blue Label Distribution

BLD provides electronic products and services throughout South Africa through its extensive distribution channels. These encompass but are not limited to, banks, retailers, spaza shops, informal traders, and petroleum forecourts. We aim to stimulate and contribute to financial inclusion by providing convenient digital transacting solutions to all.

Our technology provides our customer base with an efficient and user-friendly interface, enabling the sale of products and services through the integration of various hardware solutions. These devices and integrations allow for the continued growth of an ever expanding base of products, as well as functionality that is constantly refined to empower traders into the future.

BLD is firmly committed to the upskilling and competence development of its trading base. With each device placement, traders and staff are trained and allocated fit-for-purpose marketing material aligned to their chosen product set, supporting trader revenue growth.

We are committed to customer service. With a full line of sight of the challenges that they face, we continue to address such challenges on an ongoing basis through our insourced Customer Interaction Centre. This Centre provides intelligent analysis of trading patterns and usage, allowing us to identify further opportunities for growth. The business unit will capitalise on the advanced technical platforms provided by our information technology division that embed Blue Label's entrepreneurial culture and agile practices and improve our ability to execute strategic growth objectives. Increased scale and agility allow for delivery across multiple channels while expanding our base of customers. This enables us to continue offering additional products and services more rapidly. BLD continues to drive a growth mindset while remaining true to our customer-centric approach.



Ticketpro offers unique and specialised services in eventing, sport, and transport in South Africa. This division enhances Blue Label's ability to secure distribution contracts by offering customers access to exclusive transport services, sporting events and entertainment as a way of boosting foot traffic to their online platforms.

Although Ticketpro has been negatively affected by the COVID-19 restrictions on in-person events, it has launched an online streaming events platform, COVID Zero, to maintain relevance and provide artists and fans with a platform to safely share and enjoy such content. COVID Zero empowers entertainers and raises funds for charities to provide less fortunate South Africans with face masks, hand sanitisers, and food parcels. It has utilised this quiet period to rebuild and develop new and improved systems and infrastructure, including a state of the art event ticketing platform.

Sporting and other events have been cancelled until further notice and it is estimated that these types of events will only reopen at a micro level later in 2021 or early 2022, at full scale once the vaccine rollout is fully completed. While we cannot predict how long the pandemic will endure, Ticketpro's improved platform and the new products and services available positions us to make the most of our current opportunities.



Cigicell provides municipalities in South Africa with revenue collection and revenue assurance solutions.

It is the leading distributor of prepaid electricity and water tokens in South Africa. In addition, it provides municipal customers the facility to pay their rates and taxes and traffic fine accounts via convenient retail and banking channels. Cigicell also offers financially distressed municipalities across South Africa a revenue assurance ecosystem, which encompasses a variety of solutions. These include debt funding and funding of metering infrastructure requirements. Cigicell prides itself on an efficient treasury function to support its projects on a national basis.

Municipalities are confident that Cigicell provides the best advice available and trust us to collect, protect, and enhance their revenue. Cigicell employs local semi-skilled and skilled people in the targeted municipalities, positively impacting the local economy. The organisation is continually advancing its business processes, software and hardware to complement its processes, focusing on efficiency, sustainability, and scalability.

Local government clients benefit from a risk-free arrangement with Cigicell. The model assumes all the risk by investing its own resources and processes as it is only remunerated once its revenue collection initiatives are successful according to pre-determined success measures based on historic collections.

Visual Revenue Management (VRM), a business unit within Cigicell, oversees the strategic planning, implementation and evaluation of municipal services, including data integrity and verifications, credit control and stock collections, and indigent registrations to ultimately integrate and optimise revenue management within the Cigicell Group. VRM is also a well-known service for TID rollovers as municipalities pursue to achieve the national completion date of end-2024 for this programme. It oversees and adds value to the strategic planning and coordinates project execution between role-players for electricity infrastructures, assisting to enhance electricity network stability.

Cigicel has introduced Unipay, a new product offering which drives meaningful growth in the digital bill payment environment. This solution not only offers both large and small power users the ability to pay their bills online, but will also afford any consumer the ability to digitally pay any of their post-paid bills conveniently and securely.

Comm Equipment Company (CEC)

Comm Equipment Company (CEC)

CEC specialises in financing by way of product-based lending to its clients, enabling them to provide contract products to their customers. CEC’s clients are thus able to focus on their core business and to utilise their own resources to enhance their businesses.

Over the past 18 months, CEC has conceptualised and implemented Project Boston, an arrangement between it and Cell C in order to facilitate Cell C’s operation of its post-paid base. As a result of this implementation, CEC is now focused not only on device and product financing but also on the operational running and success of the post-paid cellular business, in conjunction with Cell C.

Cell C has concluded an agreement with CEC for managed services support for a range of back-office functions relating to the servicing of the post-paid base. CEC performs certain services itself and has subcontracted the balance to a subsidiary of Vodacom. The rationale behind this is to reduce Cell C’s overheads by leveraging Vodacom scale and expertise. CEC performs these services in exchange for a share of the postpaid revenue charged to the base and is proving to be a mutually beneficial relationship.

This project has also rewritten the way in which CEC funds handsets to Cell C subscribers with the bad debt risk being assumed by CEC. The risk of bad debt is to a large extent mitigated through the guidance of the credit specialists from BluNova, the insights and experience of the Vodacom collections team and overall data-driven approach to the post-paid business.

Aside from monitoring bad debt and churn, CEC is also focused on several other key drivers, including subscriber acquisition and retention. It is addressing each of these facets through various mechanisms, including a differentiated and data-led product strategy, distinct post-paid marketing initiatives and direct sales channels for post-paid contracts.

CEC intends to capitalise on the positive customer satisfaction scores that Cell C has recently achieved, by reshaping post-paid product offerings and creating added value for consumers. In line with its commitment to innovative added value, CEC has recently launched Striide, a wellness solution offering fitness equipment to its customers on a unique rental model.

Glocell Distribution

Glocell Distribution

Glocell Distribution specialises in the distribution of starter packs through its established channels, complimenting the Group’s distribution strategy.

Blu Label Connect (BLC)

Blu Label Connect (BLC)

BLC distributes tailor-made hybrid top-up airtime and data contracts on behalf of all the major South African cellular network operators. These contracts comprise either a SIM-only package or a hybrid of airtime bundled with mobile phones, tablets, and accessories.

BLC, through its over-the-air mobile platform, enables its partners to extend their customers’ offerings into the digital space to maximise customer convenience. Its cost-effective mobile platforms enable customers to purchase its products and services using their mobile phones.

Transaction Junction (TJ)

Transaction Junction (TJ)

TJ is the foremost bank-independent payment services provider (PSP) in southern Africa, processing more than two billion transactions per annum.

TJ displayed remarkable resilience during the year, despite the significant impact of the lockdown on retailers. Its diversification strategy is built on an innovative in-house technology platform that leverages digital channels, opening the platform to multiple parties, promoting access for FinTech and innovation while allowing the company to deliver multiple bespoke solutions, at scale, across several retail segments. TJ’s success has continued to enhance its reputation in the banking sector, resulting in its solutions being certified across the five dominant retail banks in the country. Its proprietary technology layer protects it from external supplier constraints or rand/dollar exchange fluctuations enabling agile, flexible approaches to accommodate client and internal business strategies.

TJ’s technology and ubiquitous omnichannel retail strategies provide a comprehensive omnichannel payment service layer to service all customers’ digital needs.

Blu Nova

Blu Nova

BluNova has become a leading practitioner of data and decision science in South Africa. Its state of the art decision engine supplies intelligent data leads and has assisted in securing additional business for the Group, utilising market and behavioural data generated internally by Blue Label.

BluNOVA is advancing the development of capabilities in credit scoring, customer value management campaigning, lead generation and digital marketing.

Mobile network operator Cell C is being reshaped into a competitive, fit-for-purpose entity. Its turnaround strategy is yielding improved financial performance, laying a firm foundation for change as the telco aims to transition to a techno by 2024.

Cell C

Performance snapshot

Cell C continues to work proactively with all its stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy. The turnaround strategy is having a positive impact in stabilising the business and there is an improvement in the quality of earnings as the mobile operator becomes a lean, agile, and highly responsive entity. The following three pillars guide the road to long-term profitability:

  • A liquidity platform manages cashflow in the business and to see Cell C through the recapitalisation process.
  • The network strategy involves strengthening its position as a wholesale buyer and aggregator of network capacity with a quality network. Cell C is deploying an asset-light network infrastructure and through this acquisition of capacity from MTN, Cell C will have access to more than 12 500 4G/LTE ready sites for its prepaid and MVNO customers across the country, with completion scheduled for late 2023.
  • As part of its operational rationalisation, the company is moving away from a focus purely on revenue and subscriber growth, instead building profitable, long-term growth. The key performance areas include cost containment and a change in the operating model from building, owning and operating all functions to focused investment, partnering and an acquiring of services.

Please click here https://www.bluelabeltelecoms.co.za/pdf/cell-c/2020/cell-c-20210421-fy-2020-results-presentation-webcast-version-final.pdf to access Cell C's results presentation for the year ended 31 December 2020.

The focused company strategy and correctly capitalised balance sheet will lead to better asset-optimisation. The South African mobile market is in a mature phase - the long-term growth of the industry in general, and players such as Cell C in particular, will be determined by the ability to deliver innovative service offerings while assessing over-investment in capital hungry infrastructure.

The network model which Cell C is pursuing will significantly reduce network expenses, along with the need for capital expenditure, allowing the company to be profitable, accessing best-in-class infrastructure, benefitting from scale and being able to pass on value to customers. It plans to leverage its telco platform to innovate on products and services and improve digital inclusion.

The new leadership team is focused on turning the company into a profitable, innovative player in the local telecommunications industry, and as part of its rejuvenation, Cell C is transitioning into a digital lifestyle company.


Blue Label Data Solutions (Blds) and ITalk Holdings

BLDS is one of the market leaders in consumer data, big data, validation, verification, cleansing of data, and lead generation. It is accredited by the Direct Marketing Association of South Africa, of which it is a founding member.

The business supplies in excess of 150 000 qualified hot leads on a monthly basis to 24 different call centres across multiple products and clients. Its major differentiator is the quality, contractability, reliability and compliance of its data. It also utilises various analytical companies to enhance its data while performing quarterly updates on its entire database.

iTalk Holdings, the call centre operation, had a difficult year from a financial performance perspective, due to the call centre limitations imposed by lockdown regulations. However, its enhanced operations and business model will ensure improved, sustainable long-term growth. A more diverse number of campaigns allow for a blended revenue structure going forward, and as the lockdown restrictions eased iTalk established additional dial-in seats available to ramp up sales volumes with its campaign partners.

Its recent offering, namely iTalk2U, is a safe and secure web-based application that was developed during the COVID-19 pandemic, when unemployment rates increased and working remotely predominantly became the norm. iTalk2U is a decentralised sales platform that allows employees or part-time contractors to execute sales online and earn a commission per sale while working from home. The aim of iTalk2U is to provide an employment solution that empowers the people of South Africa staying ahead of the 4IR trend and it is an industry leader in this space.

iTalk2U is currently establishing training centres country wide. By attending the training centre, the call centre agent will receive access to a computer and internet, simultaneous to the assessment of such agent's capabilities. Once the agents earn income, they will be in a position to purchase their own hardware that will allow them to work offsite. Residents in poorer communities will be afforded an entrepreneurship opportunity in the form of their own start-up of a mini call centre.

While COVID-19 proved extremely disruptive to iTalk's business model, its innovation with the iTalk2U solution and other measures positions it to take advantage of international business opportunities.

The iTalk2U platform will be improved on an ongoing basis. Focus on agent training will encompass professional skills that assist them to become better call centre agents as well as budgeting techniques and other personal skills. The system will have an interactive rewards programme in place that will afford agents to purchase online products such as airtime, data and electricity through the platform.

In addition, "Blue Train", a recently established business, has been created to assist in solving South Africa's large youth unemployment rate by employing and training approximately 3 600 unemployed youth over the next year. Its training facility has the capability of accommodating up to 2 000 trainees per month.

Financial performance

The decline in revenue of 5% to R180 million was attributable to lower demand for aggregated data and lead generations as a result of Covid-19, which negatively impacted the call centre operations.

Gross profit decreased by R9 million (15%) from R58 million to R49 million, congruent with the decline in revenue and margins from 30.74% to 27.53%.

Overheads increased by R15 million primarily attributable to new learnership initiatives, whereby the benefit of is realised by way of income tax savings as a result of the section 12H allowances being claimed for such learnerships. EBITDA declined by R24 million to R17 million.

Of the core headline earnings of R21 million, BLDS accounted for R16 million. iTalk Holdings and iTalk Financial Services generated earnings of R11.5 million, of which the Group's share thereof amounted to R4.6 million.

Of the core headline earnings of R41 million in the prior year, BLDS accounted for R24 million. iTalk Holdings generated earnings of R39.6 million, and which the Group's share thereof amounted to R16 million.