With growing interest in fibre, Blue Label Telecoms — which specialises in selling prepaid airtime, electricity and ticketing — says it is looking to service the market with other prepaid products.
Co-CEOs Brett and Mark Levy talk to Business Day about their plans on prepaid, fibre, sponsorships and the growing trend of consolidation in SA telecoms.
In a market of growing fibre and fixed internet use, does Blue Label have plans to offer its own fibre services, prepaid fibre products or perhaps have its own internet service provider (ISP)?
[Brett] We’re considering all of the above, except owning an ISP.
Vumatel has got a great prepaid offering. Prepaid in the fibre world is great and massive. It’s definitely a place that we’re starting to wet our toes in. We’re definitely going to play in it. We’ll do so from two parts. One is the distribution of the prepaid vouchers. Number two, is that we want to have and deploy the routers. That router would go through our credit [system].
[Mark] We all talk about fibre, but fixed LTE is also as good as fibre. So in environments where fibre is not run, the equivalent is an LTE router. The reason those packages are so cheap is because they can dimension better. When you’re on mobile, they don’t know where you are. You can be pinging [the network towers] all over the place, which attracts a higher rate. The minute you are fixed to a location it becomes cheaper.
That’s still a massive market. Fibre and fixed LTE can run parallel to each other.
Consolidation in SA telecoms is now here, especially as so many players are interested in a tie with Telkom. Your thoughts?
[Brett] It’s interesting because in a Telkom/MTN world, Telkom can’t have a strategy of rolling out base stations if MTN is going to buy it. You can’t have two base stations next to each other. If it’s going to be a Telkom/MTN tie-up, then things have to move quickly, otherwise Telkom is going to waste a lot of money in things they won’t use post the transaction.
Whatever the transaction is, I’m not sure if it will be Telkom as we know it today. It will be slightly different, or in pieces.
Blue Label has flagged that airtime sales are likely to remain flat for the coming financial year. How is this the case when people are consuming more services, like the internet, on mobile networks?
[Brett] A year ago, you used to buy 1GB for R150. Today, you buy 1GB for R79. So you can now buy 2GB for the R150 you are already spending. Realistically, you use the 2GB today, not the 1GB of the past. So you’re spending the same amount of money but just getting greater value for it.
The elasticity changes when you increase to 3GB or 4GB, then the revenue will increase to maybe R200.
But it’s in pieces because people, right now, are spending the same amount of money, getting more gigs [gigabytes of data] and satisfaction.
It does change, but it’s going to drop first and then it will increase.
That’s the period we’re going through. It’s not a forever decrease, but for the year you’re going to see a stagnant market. Data going through in droves, then you’ll see a pick-up.
Blue Label is famous for sponsoring a number of sports and entertainment activities in SA like cricket and rugby. With more events now happening post-Covid, does the company have an appetite to buy or name a venue to replace the Ticketpro Dome?
[Mark] Not particularly.
I suppose there’s commercial rationale why we do certain things. The Ticketpro Dome served a good purpose. It allowed us access into the stadium to do ticketing and we worked that out.
We’ve done sponsorships in the past. We’re busy with one now, which we think is more of an upliftment, sponsoring some of the golf in the market. There are a lot of players that don’t have money and we’re trying to create more tournaments.
We’ll do some press releases in time around that. But no, we have no real intention for any mainstream sponsorships, unless it stacks up commercially.
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