Blue Label Telecoms forecasts surge in interim earnings

Blue Label’s office in Johannesburg. Photo: Simphiwe Mbokazi / Independent Newspapers

Blue Label’s office in Johannesburg. Photo: Simphiwe Mbokazi / Independent Newspapers

Published Feb 16, 2024


Blue Label Telecoms said core headline earnings per share were expected to increase between 47.07% and 47.2% for the six months to November 30, 2023, from 3.94 cents at the same time a year before.

Earnings per share were expected to increase between 45.49% and 45.84% to a loss equivalent to 8.74c a share, a statement said yesterday.

Core headline earnings amounted to R420 million (November 2022: R35m), equating to core headline earnings of 47.15c per share (3.94c per share).

Excluding the positive contributions of R65m in the six-month period, and the negative contributions of R421m in the comparative period, due to the recapitalisation of Cell C, core headline earnings fell by R100m (22%) from R455m to R355m, and core headline earnings a share fell 23% from 51.72c a share in the comparative period to 39.90c a share.

This decline was attributable to a decrease of R119m in Comm Equipment Company (CEC), while the other entities in the group increased by R19m (10%) compared to the comparative period.

The anticipated decline in CEC’s core headline earnings was due to lower gross profit from increased distribution agreement related expenditure, and a big increase in the expected credit loss (ECL) over the comparative period.

“This aligns with the expansion of CEC’s subscriber base and the deteriorating macroeconomic environment in South Africa, characterised by rising interest rates, power outages, and a depreciating rand.”

CEC had increased its ECLs in anticipation of heightened future losses, aligning with the approach taken by other consumer lenders.

On exclusion of the positive and negative contributions from both the current and comparative periods, earnings per share and headline earnings per share declined by 23% to 38.42c per share and by 22% to 38.66c per share, respectively.