Blue Label Telecoms returns to profit after Cell C write-off
The mobile operator is shifting focus to other income streams, such as distribution of prepaid electricity
JSE-listed technology group Blue Label Telecoms, which has lost 80% of its value over the past two years, said it had returned to profit in its half year to end-November after writing off its investment in struggling mobile operator Cell C.
The group reported core headline earnings — which includes discontinued operations — of R390m from a loss of R128m previously. Group revenue from continuing operations rose 2% to R11.5bn.
Blue Label is the largest shareholder of Cell C, which has struggled to make consistent profits since it became SA’s third mobile operator in 2001. The mobile operator is grappling with a hefty debt burden.
Blue Label had fully written off its investment in Cell C by May 2019, and therefore fair value losses of R493m were excluded from its interim results.
The group is now pursuing a “back to basics” strategy, and while traditional airtime and data remained the biggest part of the group, the company is focused on enhancing its non-telecommunications portfolio.
This includes distribution of prepaid electricity, with the company saying that net commissions earned on the distribution of prepaid electricity amounted to R150m.
“We continue to drive penetration into our municipal prepaid utilities market,” the group said.
“We have added to our revenue collection services through the development of a comprehensive revenue assurance product suite which we expect will enhance traction and margins in this market,” the statement read.