Blue Label Telecoms joint-CEO Mark Levy says load-shedding has had no real impact on the company's prepaid electricity sales.
"We actually strangely enough haven't seen any downturn due to load-shedding."
Levy believes consumers' electricity usage patterns have changed but rolling blackouts have had no impact on the company's bottom line when it comes to electricity voucher sales.
"When a guy spends R110 on electricity a month, I don't believe he ever had enough electricity to last him a full month, so if he used to switch his lights off from six to eight to save money, now with load-shedding, they get switched off automatically."
Levy says 10% of Blue Label's gross profit comes from its electricity sector. Net commissions from the distribution of prepaid electricity brought in R165 million in the last financial year, an increase of 23% from the previous year. This equated to R10.4 billion in sales.
"When we started, we only did R3 million in our first year [on prepaid electricity]; now four-and-a-half years later we are doing R10.4 billion," explains Levy.
Levy says Blue Label still sees significant growth in the electricity market.
"There are already nine million prepaid electricity meters deployed, and government says it is going to deploy another nine million meters. So the potential growth is as far as the eye can see.
"Eskom supplies 50% of the market direct, 278 guys supply the other 50%, and out of those 278 only 90 currently allow people like us to vend, so we still see significant growth potential in this market."
Levy says while load-shedding has had no negative impact on sales, increased Eskom tariffs have not boosted profit either.
"It's unfortunate from a business point of view, we don't get more margin, we get paid on kilowatts, so if 10 kilowatts costs R100, if Eskom increases this by 16% then 10 kilowatts cost R116. We still get paid for the 10 kilowatts, so from that perspective it doesn't help us."
Liquidity
Blue Label believes prepaid water could be the next big thing, saying it is perfectly positioned to replicate its already working electricity token model in the prepaid water market.
"Prepaid makes sense: no bad debt, no waiting to collect your money, no debtors department, pay for something you will only get in the future. And it makes sense if there are going to be 18 million prepaid electricity meters, there will also be 18 million water meters," says Levy.
Blue Label says it is already garnering interest from municipalities, water boards, equipment suppliers, township developers and closed communities. The company has so far signed up four municipalities to convert to prepaid water. Despite the huge potential in the market, Levy says uptake has been slow so far.
"We can promote it now but unless a municipality allows us to vend a token we can't sell any. So there is always a lag, but slowly but surely the guys will start converting water to prepaid."
Another plus is that consumers have already been educated on how to use prepaid electricity, so prepaid water "adoption is going to be very aggressive and very quick".
Share