SEGMENTAL REVIEWS

This segment distributes prepaid secure electronic tokens of value (e-tokens) to the South African wholesale and retail consumer markets.

The subsidiaries encompassing this segment all fulfil specific roles while simultaneously benefiting from the purchasing power and vertical integration of the group.

The Prepaid Company (TPC)

Established in 2001, TPC was the original company that spearheaded the group’s entrance into the prepaid airtime industry.
It remains the major contributor to group revenue and profitability.

TPC supplies virtual and physical e-tokens to all of the major chain stores in South Africa and is a leading distributor of airtime on behalf of all of the major networks.

Distribution of all virtual products and starter packs is facilitated by proven technology developed in-house which ensures ultimate efficiency at purchasing, distribution and control levels.

Crown Cellular (Crown)

Crown trades as a wholesale and retail distributor of physical and virtual prepaid airtime and starter packs, servicing the informal market. Crown operates free-standing stores as well as several kiosks within large independent stores. Its entire inventory is purchased from TPC.

Comm Express Services (CES)

CES markets and distributes prepaid airtime through in-house manufactured vending machines. The technology applied to this method of distribution is managed by Activi, the subsidiary of Blue Label Telecoms responsible for technology development, implementation and maintenance.

CES also downloads virtual prepaid airtime directly into point-of-sale devices of independent retailers.

Cigicell

Cigicell is a distributor of virtual prepaid airtime and electricity through a broad network of distribution channels including the forecourts of the major oil companies.

Virtual Voucher

Distributor of prepaid airtime through an integrated prepaid voucher management system to in excess of 500 Engen petroleum sites nationwide.

Kwikpay

Distributes virtual prepaid airtime, electricity vouchers and bill payments through multi-application and managed terminal vending solutions and integrated point-of-sale devices.

*When compared to core pro forma earnings

		The introduction of RICA The introduction of the Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA) requires the registration of personal details of all South African cell phone subscribers. All new starter pack activations subsequent to 1 August 2009 require such registration. Furthermore, all historically active users of cell phones will have to be registered within eighteen months from that date. Registration is administratively complex and has the potential to slow down activations. As a solution to this, Activi has developed a suite of data collection products that are designed to complement existing point-of-sale devices, enabling registration to be seamlessly implemented.
		Prepaid electricity The introduction of prepaid electricity vouchers into the channels serviced by the South African distribution segment, has demonstrated the ability to quickly grow the distribution of additional products to access the segment's vast footprint. Accolades For the fourth year in succession, Blue Label Telecoms has been awarded the Vodacom “Best Channel Partner”. This award is measured on volume, growth, average revenue per user (ARPU) and churn. The group has also been recognised as the number one prepaid distribution channel partner of Telkom for the past five years.

PROSPECTS

It is anticipated that revenue will continue to grow organically, not only through the existing product offering, but also through the additional product offerings that have been developed in-house and which are expected to be rolled out across the group’s points-ofpresence during the forthcoming year. These initiatives include:

• A technical arrangement with Gidani, the licensed operators of Lotto in South Africa to integrate their products into till points and other distribution channels
• Prepaid electricity distribution contracts with additional municipalities
• The introduction of off- line prepaid top-up electricity that will complement the current on-line top-up facility that is currently being offered
• Prepaid bus ticketing
• Money remittances throughout the group’s touch points.