Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.


COVID-19 store closures hurt SA's Blue Label Telecoms

Article Image
South African ICT company Blue Label Telecoms – which is a major shareholder in struggling mobile operator Cell C – is expecting to bounce back from last year's losses related to Cell C but is now predicting an earnings knock from its WiConnect business.

The Johannesburg Stock Exchange-listed group said in a trading statement that it is expecting headline earnings per share for the financial year ended May 31, 2020, to increase by more than 20% compared to the previous year, when it reported headline losses.

However, it is expecting to take a R330 million (US$19.3 million) hit to earnings because of COVID-19 impacts to its WiConnect business.

"Given the uncertainty of the tenure of the pandemic and the resultant losses attributable there to impacting on its financial feasibility, a decision was made to cease the operations of the WiConnect retail stores," Blue Label said in the trading statement.

It said that although a turnaround strategy had been implemented at WiConnect, COVID-19 had a significant negative impact on the retail operations including "increased costs of inventories as a result of a weaker Rand, periods of non-trading as a result of the nationwide lockdown and consumers foregoing discretionary purchases."

WiConnect was previously called Edgars Connect, and the chain of stores opened in 2015 as a joint venture with retailer Edgars to sell SIM cards, mobile hardware and value-added services.

Edgars' parent company, Edcon, filed for business rescue in April 2020, after the group was unable to pay suppliers due to weak sales early in the year which were compounded by forced store closures due to South Africa's COVID-19 lockdown.

Blue Label said its exposure to the Edcon Group amounted to R49 million ($2.9 million) and of this R21 million ($1.2 million) relates to the retail stores and is included in the R330 million ($19.3 million) negative impact.

Blue Label did, however, generate positive cash flows from its trading operations for the year and said that this, together with the proceeds received from selling the 3G handset division and the Blue Label Mobile Group, would help to reduce interest-bearing debt and in turn strengthen the group's balance sheet.

Blue Label Telecoms joint-CEOs Mark and Brett Levy
Blue Label Telecoms joint-CEOs Mark and Brett Levy

Cell C struggles
It has been a tough few financial years for Blue Label – which specializes in prepaid products and electronic distribution of virtual merchandise – especially due to financial strain caused by its investment in Cell C.

In August 2017, Blue Label Telecoms bought a 45% stake in Cell C for R5.5 billion ($320 million) as part of Cell C's long-awaited recapitalization. But at the end of 2019, Blue Label's board opened up about its disappointment in the performance of Cell C, after it was forced to write down the value of its entire investment in Cell C to zero.

In September 2019, Cell C reported a massive loss of R8 billion ($467 million) for its financial year that ended May 31.

Cell C, which is South Arica's third-biggest mobile operator, has received a number of acquisition offers but said last month it may be forced to lay off 40% of its staff.

For more on this topic, see:

— Paula Gilbert, Editor, Connecting Africa

Innovation hub


Hot startup of the month: Pan-African fintech KamaPay

This month's hot startup is pan-African fintech KamaPay, which helps individuals and businesses make cross-border payments on the continent.


Afretec awards $3.3M in grants to African research teams

The African Engineering and Technology Network (Afretec) has awarded grants worth $300,000 each to 11 university research teams across Africa to advance digital technologies.

More Innovation hub

Latest video

More videos

Sponsored video

More videos

Industry announcements

More Industry announcements

Flash poll

All polls

Africa Tech Perspectives


Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.


Challenges and opportunities for women's tech careers

A new survey reveals that COVID-19, the cost-of-living crisis, skills shortages and a lack of mentorship have negatively affected women's career development over the past two years.


Survey: Opportunities for Women in Tech

Take our new survey for women across Asia, Europe and Africa looking at the biggest challenges and opportunities for women-led enterprises and trends in tech careers for women.

More AfricaCom perspectives

Upcoming events

London Tech Week
June 13-16, 2023
Queen Elizabeth II Centre, Broad Sanctuary, London SW1P 3EE
Cybertech Africa 2023
August 1-2, 2023
Kigali Convention Center, Kigali, Rwanda
Africa Tech Festival, Home of AfricaCom and AfricaTech
November 13-16, 2023
CTICC, Cape Town
More Upcoming events

Guest Perspectives


Omdia View: February 2023

By Omdia Analysts

In February 2023 key events in the Middle East and Africa included a major Internet project for Africa's underserved by Liquid Intelligent Technologies and Microsoft as well as a 5G launch in Tanzania – that and more in this month's Omdia View.


Omdia View: July 2022

By Omdia Analysts

Kenya and Zambia move towards 5G with new spectrum allocations while Tunisie Telecom plans to shut down its 3G network - that and more in this month's Omdia View.

More Guest Perspectives

Partner perspectives

All Partner Perspectives

Like us on Facebook

Newsletter Sign Up

Sign Up