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BLUE LABEL INTEGRATED ANNUAL REPORT 2014
AIRTIME
CONVERSATION WITH JOINT
CHIEF EXECUTIVE OFFICERS
CONTINUED
OPERATING PERFORMANCE – SOUTH
AFRICA
The South African business remains the predominant
contributor to the Group’s profitability. Currently, we
are investing in our distribution channel, mainly by
expanding our fleet of trucks and team of
accompanying foot soldiers.
Income is derived from three main pillars: the sales of
commodities (such as airtime and electricity), income
from annuity transactions (from our SIM card base,
contractual Vodacom starter packs and location-
based services and other subscription services) and
interest earned on surplus cash.
Over the years we have aggressively innovated,
adapted and diversified our business model to
prevailing circumstances. Examples are the
introduction of prepaid electricity, formalising
the business into a number of categories of
products and identifying discounting opportunities
in bulk purchasing of inventory and on early
settlement discounts.
INTERNATIONAL DISTRIBUTION
In both Mexico and India, the catalyst for growth is in
strategically augmenting our range of products and
services, while expanding our distribution footprint.
This requires rolling out higher-specification devices
in both countries.
➔
Blue Label Mexico:
Following the launch of
merchant acquiring facilities announced late last
year, our merchants are progressively upgrading
their devices to accept debit and credit card
transactions, thereby enabling consumers to shop
where they live. The project to deploy up
to 123 000 POS terminals is progressing steadily,
with over 70% now installed.
➔
Oxigen Services India:
While the country is the
size of a continent, the telecoms recharge market
is characterised by wafer-thin airtime margins. As
a result, we have made a conscious shift towards
providing versatile payment solutions in the
financial services sector. Opportunities in this sector
include the domestic and international remittance
market, which is estimated to reach USD90 billion
in calendar 2014.
MEASURING GROWTH
We believe our growth should be measured by gross
profit or gross margin achieved. This is because there
is an increasing trend for us to act as an agent on
sales of certain products and services, of which only
the commission or gross profit earned and not the
face value of the sale, is included in the revenue line.