Blue Cellular, a mobile distribution specialist with almost R1bn/year in revenue, is “working towards” a JSE listing as it eyes expansion in the corporate sector and opportunities in delivering content to mobile users, its founder, Barry Taitz, said on Monday.
The company, which has flown largely under the radar until now, has built a significant business selling prepaid starter packs and related products in underserviced parts of South Africa, including townships and rural areas.
It’s now planning to take its products and services to the business market to help companies manage and reduce their mobile bills.
“A listing is something I’m working towards,” Taitz said. It will only happen, though, if Blue Cellular needs the money to fund its aggressive expansion plans. “If the opportunity comes, it’s there.”
Taitz, who used to work at The Prepaid Company — now owned by Blue Label Telecoms — started Blue Cellular (no relation to Blue Label) in 2003 and quickly built a business providing starter packs to spaza shops and other informal retailers in the townships and outlying parts of the country.
The company today boasts nearly 5m active customers (defined as those creating a revenue-generating event in the past six months) using the networks of Vodacom, MTN and Cell C (it does not currently work with Telkom).
Despite turning over nearly R1bn/year — albeit on thin margins — it has just four full-time employees, Taitz said. Most of the business has been outsourced, including on-the-ground sales (with agents paid on a pure commission basis).
Taitz, who still owns 100% of the company — it has never taken on any debt — said it has “lived in the shadow” of bigger rivals, but that’s now set to change as it tackles the corporate market and seeks acquisitions.
“In South Africa, we are looking to buy a few of the smaller distributors as the market gets saturated,” he said. He is particularly interested in deals that will strengthen Blue Cellular in South Africa’s coastal regions, where it’s not as strong as it is inland.
And through a new business called Value Cellular, headed by the former head of Vodacom South Africa’s wholesale business, John Fernades, Blue Cellular intends tackling the business market, from small businesses all the way up to big corporations.
Our teams will … analyse their bills and put them on the right packages. No one needs to go on a contract anymore
Taitz said Value Cellular is aiming for R300m in revenue in the first year, and to be a R1bn business in three years’ time.
The plan, said Fernandes, is to convince business customers of the value of switching to cheaper prepaid alternatives. “We want to replace what Nashua and Autopage did in the prepaid space.”
Taitz said business customers — who tend to be on contracts — are “paying too much” for mobile communications.
“We are going to design prepaid packages for them and show them how they can save 40-50% of their bills using prepaid platforms. Our teams will … analyse their bills and put them on the right packages. No one needs to go on a contract anymore.”
Business customers will be offered a range of prepaid options that aren’t available in the retail channels, including the ability to pay off handsets over time based on a company’s credit risk profile. “The operators give us products based on volume that are not available to the rest of the market. And we can do things the networks can’t.”
Content distribution, meanwhile, is another potentially big growth area for Blue Cellular.
Taitz said he has begun negotiating with content providers in the US to distribute their products to mobile users in Africa. He believe’s this is a “goldmine” waiting to be tapped.
Most users in Africa can’t afford traditional pay-television services, but do want access to affordable quality content. The best way of delivering that content is via the mobile networks to smartphones, he said. — © 2017 NewsCentral Media
