Blue Label eyes collection of municipal power payments
The tech firm is looking at ways to boost returns, such as locating lost electricity tokens, municipal revenue collection and meter audits
Blue Label Telecoms, a technology company that specialises in virtual distribution of prepaid power and airtime, is considering moving into electricity-revenue collection for cash-strapped municipalities as it hunts for new ways to make money.
“We’re really looking at other revenue drivers where we could enhance our margin, probably break it into revenue collection, meter audits, all those types of things would bode well,” Blue Label Telecoms co-CEO Mark Levy told Business Day.
Founded in 2001 by two brothers while sipping whisky of the same name, Blue Label has been battered operationally and in the stock market in recent years due to the ill-fated acquisition of cellphone operator Cell C, has struggled with R8.7bn in debt on its balance sheet.
While Cell C has been a drag, the company’s other divisions have been pumping money, including its electricity-distribution business on behalf of municipalities, which are keen to put more residents on prepaid electricity to improve collection of payments. Blue Label’s group revenue was 7% up at R59.9bn for the year to end-May 2020. Its gross electricity sales rose 13% to R22.7bn for the period, remaining consistent even through the difficult April and May lockdown months.
Through its subsidiary, Cigicell, the company has traditionally made this revenue by selling prepaid electricity tokens on behalf of about 95 municipalities and Eskom since 2004.
Blue Label competes with banks and other companies, such as Net1’s EasyPay. Levy said that with margins at less than 2%, or R288m, of total revenue from the sale of electricity, Blue Label was looking at other ways to boost returns, including locating lost electricity tokens that are not being billed, helping municipalities with revenue collection and meter audits.
Simply selling tokens on behalf of a municipality was pressured, Levy said. It was “always just coming down and down”, and even more so when other parties won tenders for such services but ended up outsourcing to Blue Label, pocketing the difference, he said.
Levy said that conducting investigations and audits to find tokens was made difficult by having to engage with various parties across SA.
“The problem is that there are 270 municipalities in this country, each one doing its own thing, independently of one another, and there are multiple or a plethora of different service providers in each municipality that have won tenders on different time frames.”
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