Blue Label under the pump

Blue Label’s revenue and earnings dropped for the first six months of the 2025 financial year as the business’ Comm Equipment Company (CEC) struggled significantly.

Blue Label, which owns a non-controlling stake in Cell C through its subsidiary, The Prepaid Company (TPC), recently released its interim results for the six months ended 30 November 2024.

The company’s total revenue decreased by 4% to R7.2 billion.

However, when gross revenue from “PINless top-ups,” prepaid electricity, ticketing, and universal vouchers are included, total revenue effectively increased by 8% to R47.4 billion.

The company’s earnings also declined, with earnings per share down 4% to 43.98 cents per share.

Headline earnings per share performed slightly better and remained stable at 46.01 cents per share.

Blue Label’s EBITDA decreased by 6%, from R697 million to R653 million, while core headline earnings recorded a marginal increase of R5 million from R419 million to R424 million.

The company attributed the drop in its earnings to three factors:

• A shrinking subscriber base for CEC
• Lower average revenue per user (ARPU)
• Higher finance costs, particularly related to the sale of CEC handset receivables

The company said the proceeds from the sale were transferred from CEC to TPC and ultimately to Cell C through the acquisition of airtime.

Blue Label holds a 49.53% participatory interest in Cell C but does not control it.

The company’s other segments had a mixed performance.

The Africa Distribution segment’s revenue fell by 4% to R7.1 billion, but prepaid electricity revenue increased by 16%.

Revenue in the company’s Solutions division fell by 14%, but core headline earnings rose 37% to R30 million.

The Corporate segment saw its losses narrow slightly, with EBITDA improving by 18%.

Overall, Blue Label’s debt position worsened, as finance costs increased by 16% to R532 million while net borrowings increased to R4.38 billion.

By the end of November 2024, the company’s cash and cash equivalents stood at R857 million, down from R896 million.