Blu Label says MTN is coming for its Capitec business - Brett Levy — Blu Label co-CEO Brett Levy

MTN’s stated intention to deal directly with South Africa’s banks on airtime sales comes down, for Blu Label Unlimited Group, to one account: Capitec.

MTN South Africa CEO Ferdi Moolman said at a media briefing on Tuesday – the same one at which he disclosed that the industry pushes up to 300 million Sim cards a year into a country of 65 million people – that the banks have largely sold airtime through third parties, and that MTN wants direct relationships with them instead.

Asked on Wednesday whether Blu Label is one of those third parties and how exposed it is, co-CEO Brett Levy said MTN is the only network that deals directly with all the banks, and that Capitec is the exception. Blu Label does no MTN business with any other bank.

Levy’s counter was that MTN gains little by going direct. There is “no margin accretion” in it for the operator, he said, and the market is moving away from network-branded airtime towards generic vouchers that work across all four networks – Blu Label’s own products among them.

The group’s results support the direction of that argument. Gross revenue from universal vouchers rose 22% in the year to 31 May, from R15.3-billion to R18.7-billion, growth Blu Label attributes to expanding BluVoucher sales through financial institution channels.

On whether he is worried, Levy said Blu Label has to stay on top of its game and remain accretive to every distribution channel it serves, not only Capitec. Blu Label sells electricity, vouchers and airtime through all the banks.

Banks against networks

The more interesting part of the answer was the argument underneath it: Levy said banks and mobile operators are increasingly competitors, not partners with a distribution problem to solve.

“They’re going for the same client for the same product,” he said, and the question of where banks and networks end up will take two or three years to resolve.

MTN’s MoMo and Vodacom’s VodaPay are both chasing banking customers, he said, and the banks are unlikely to concede that ground easily. That contest is already visible in the informal payments market, where the operators, the banks and the card acquirers are pursuing the same merchants.