South Africa’s Blue Label Seeks Opportunities in Latin America
Telecoms player Blue Label has set its sights on ambitious expansion in the emerging markets of Latin America by forming a joint-venture company in Mexico. Blue Label Mexico is owned jointly by Nadhari, a company that develops products and services for emerging markets. The new venture would pursue opportunities that were complementary to its areas of business, Blue Label (BLU) said yesterday.
The Mexican venture will sell and distribute secure electronic tokens that give customers access to products including Microsoft software and services. Senior managers and technicians have been posted to Mexico to introduce its business processes and technologies ready for its official launch on September 1.
The group sees foreign expansion as a way of reducing its dependency on the South African market and as a timely move into regions where the demand for electronic payment services is growing. Its activities are based on electronic transactions and began with the sale of cellphone airtime.
It is now using its network of point-of-sale terminals to expand into prepaid electricity, water and insurance policies, the sale of bus and train tickets, and bill payments.
The company is 12% owned by Microsoft, which paid at least R560m for the shares ahead of its listing last November. Microsoft plans to collaborate with Blue Label to sell products and services in developing countries and share the revenue that generates.
Blue Label issued a trading update yesterday, saying core earnings for the year to May would come in at R367 million-R384 million, up from the R340m predicted in its prelisting forecast.
Core earnings per share will exceed the forecast 45,81c by 5%-10%, by coming in at 47,89c- 50,11c. The rise was due partly to an increased demand for the prepaid airtime Blue Label distributes and to a restructuring of its subsidiaries to achieve economies of scale and operational efficiencies.
The results had also been pepped up by using the cash it raised by listing to enhance its liquidity and the ability of its operations to generate cash.
Blue Label shares were trading 10c up at 610c yesterday after a belated afternoon opening of the JSE caused by network problems.