Blue Label Telecoms said load-shedding weighed heavily on its operations in 2023 and subdued demand for its products and services like prepaid electricity and airtime.
Blue Label reported its results for the year ended 31 May 2023 today, which revealed a significant drop in profit.
The company’s profit for the year declined from R1.09 billion in 2022 to R288.17 million in 2023. Blue Label also saw a significant decrease in earnings in the period.
However, the company said its core businesses have shown consistent growth in revenue, gross profit, and core headline earnings per share for the year ended 31 May 2023.
It said the predominant extraneous contributions to the May 2023 basic, headline, and core headline earnings per share are primarily associated with the recapitalisation transaction of Cell C.
Blue Label’s core headline earnings per share (HEPS) dropped to 45.55 cents from 121.01 cents the year before, and earnings per share (EPS) decreased from 117.13 cents to 30.48 cents.
However, excluding the extraneous contributions of R523 million in the current year and the non-recurring income of R214 million in the prior year, the company’s earnings grew compared to 2022.
Excluding the above measures, core HEPS grew by 9%, while EPS increased by 8%.
Blue Label’s revenue increased by R1.1 billion (6%) in the period to R18.9 billion.
“However, as only the gross profit earned on PINless top-ups, prepaid electricity, ticketing, and gaming is recognised as revenue […] the effective revenue growth equated to R4.5 billion (6%),” the company explained.
Therefore, this resulted in a total revenue of R76.8 billion compared to the prior year of R72.3 billion.
Gross profit increased by R552 million (19%) from R2.93 billion to R3.48 billion, corresponding to an increase in margins from 16.46% to 18.41%.
The company said this increase can be partially attributed to the growth in ‘PINless top-up’, prepaid electricity, ticketing, and gaming, where only the gross profit earned thereon is recognised as revenue.
Blue Label said load-shedding had been a significant challenge recently, “which is entirely out of management’s control”.
“The frequent power outages imposed by external factors have adversely affected our operational efficiency, resulting in disruptions, delays, and additional costs.”
“It has negatively impacted the sale of prepaid electricity, prepaid airtime, starter packs and our call centre operations, all of which are significant revenue streams for the group.”
Blue Label said the unpredictability and intermittent nature of load-shedding made it challenging for customers to conveniently purchase these products, especially during the second half of the financial year when the country experienced stage 4 and increased levels of load-shedding.