From spaza shops to big-league ambitions
ENTREPRENEUR: Founder of Blue Cellular Barry Taitz
The man who has quietly built an empire worth R1bn by selling Sim cards wants to take his business to the next level with a JSE listing
After 13 years of operating under the radar, Barry Taitz is ready to take his empire public. The founder and sole shareholder of Blue Cellular is eyeing a possible listing of the company that he hopes will unlock expansion opportunities in the rest of Africa.
Blue Cellular began by distributing prepaid Sim cards and airtime recharge vouchers mainly to traders operating in rural areas and townships.
Taitz started the business with just R50,000 in 2003; by the end of last year it had recorded almost R1bn in sales. It has about 5m prepaid customers, many of them in rural areas. Every time those customers buy airtime, Blue Cellular earns a commission.
Other companies focus mainly on cities and towns. “I spotted a gap in the market and had to come up with innovative ways to capture it,” Taitz says.
Barry Taitz is ready to take his empire public
To do that, Blue Cellular provided spaza shop owners with goods as rewards. The company began to import cheap products such as batteries, school materials and some toiletries that it gave to spaza shops and other informal retailers for free. In exchange, those stores were asked to sell only Blue Cellular products. The business quickly grew and Taitz extended his reach to informal cellphone shops, which he also supplied with cellphone accessories, such as earphones and battery chargers, as incentives.
To protect his business model, Taitz kept his strategy of rewarding stores under wraps to prevent his competitors from replicating his model. “I worked directly with those store owners,” says Taitz.
But it hasn’t always been smooth sailing. The business went through a rough patch in 2008 during the xenophobic attacks. Stores refused to keep stock in case they came under attack. Later, the Regulation of Interception of Communications & Provision of Communication-Related Information Act (Rica) was also a setback for Blue Cellular, when shops refused to register subscribers because it was a time-consuming process.
That change forced Blue Cellular to shift its business model. It began to work directly with people in the communities it served, including churches, to appoint Sim card distribution agents.
“We invested in new technology to create a platform for agents and to automate our system,” he says.
The company closed its warehouse and focused on selling prepaid Sim cards and recharge vouchers bundled with promotional goods.
“We also target large events, such as big soccer tournaments,” says Taitz. The company has 1,000 agents across the country.
To grow the business, Taitz has plans to work with small to medium-sized enterprises and corporates through his newly established division, Value Cellular, which aims to move high-end contract users to prepaid to help them reduce their cellphone bills.
Expansion elsewhere in Africa as well as a possible listing are on the cards over the next year.