welcome to blue label telecoms investor...
TRANSCRIPT
Welcome to Blue Label Telecoms – Investor Day
20 October 2010
08h30 – 08h35 Welcome Michael Campbell
08h35-08h50 Corporate Governance Structure (slides 4 – 9) Neil Lazarus
08h50-09h15 Introduction to Blue Label Telecoms (slides 10 – 15) Brett and Mark Levy
09h15-09h45 The Financials (slides 16 – 27) David Rivkind
10h00–10h40 Blue Label South Africa (slides 28 – 54) Bradley Turkington
10h45-11h25 Blue Label International (slides 55 – 82) JJ Botha
11h30-12h00 Technology (slides 83 – 95) Dr Angelo Roussos
12h00-12h45 Blue Label Mobile (slides 96 – 120) Dr David Fraser
12h45 -13h15 Demo Room
14h00-14h30 Blue Label Solutions (slides 121 – 131) John Hawthorne
Agenda
2
Welcome
Michael CampbellInvestor Relations
3
Corporate Governance
Neil Lazarus, SCNon-Executive Director
4
Self Regulation
• Laws are enforced by outside agencies such as government.
• Compliance with governance standards are self-policed and self-regulated.
• The driver for self-regulation is the competitive advantage which isconferred on businesses that create and maintain a culture ofintegrity-driven performance.
• This is because “The ultimate compliance officer is the company’sstakeholders who will let the board know by their continued supportof the company if they accept the departure from a recommendedpractice and the reasons furnished for doing so.” (King III)
5
The Board
• Ethical leadership requires a recognition that a company does not operate in a vacuum and thatits mandate to operate is made possible by a multitude of stakeholders which requires taking intoaccount a balanced approach to stakeholder issues founded upon trust and integrity.
• Blue Label’s board directs, governs and is in effective control of the company.
• The board informs and approves the company’s strategy and satisfies itself that business plansare not encumbered by unexamined risks.
• Directors act in the best interests of the company, inter alia, by disclosing conflicts where theyexist, dealing in securities as allowed by internal policies and by adhering to legal standards ofconduct.
• The board delegates certain of its functions to well structured committees without abdicating itsown responsibilities .
• The board has an appropriate balance of skills and experience within its ranks to fulfill itsmandate.
• Regular performance evaluations are carried out by the board to improve efficiency andeffectiveness and to develop individual directors to enable them to add better value.
6
Risk Management
• Risk assessments are continuously performed, ranked, prioritizedand addressed.
• The board receives assurances regarding the effectiveness of therisk management processes to enable complete, timely andaccessible risk disclosure to stakeholders.
• The board ensures that risk management is not detached from therealities of the company’s business.
• Due to the critical nature of IT to Blue Label’s business, the boardand the risk committee place special emphasis on IT governance.
7
Compliance
• The board assumes responsibility for the company’s compliance withthe law and with non-binding rules, codes and standards with which thecompany has elected to comply and also monitors compliance.
• The board aims to ensure that we do not only consider compliancewhen there is a breach with specific consequences.
• The board recognizes that self-regulation requires comprehensive andwell policed compliance programmes and policies, including:
- Group protocols for investor and media relations;- Market disclosure and communications policy;- Legal compliance protocols.
• The objective is to provide employees with a statement of disclosureobligations as well as a practical guide for the dissemination ofinformation.
8
Stakeholder Governance
• The board recognizes that effective stakeholder engagement isessential to good corporate governance and that the days when boardscould merely pay lip service to concerns such as corporateresponsibility, ethical business practices and sustainability are over.
• Stakeholder relationships provide the platform for the board to take intoaccount the concerns and objectives of the company’s stakeholders inits decision making.
• The board does not want to respond in crisis mode when the companyfalls short of stakeholder expectations.
• The board aims to achieve an integrated and balanced approach todecision making by ensuring that it has sound stakeholder strategiesand policies in place.
• The board recognizes that comprehensive, forward-looking informationis the new benchmark in corporate reporting.
9
Blue Label Telecoms
Brett and Mark LevyJoint CEOs
10
Background
• History• Lifestyle enabler - product to the people• Multiple products and services through a single interface• Convergence of all suppliers under one roof• Neutral aggregator• Leading distributor of prepaid telecoms in SA• Moving money outside of the banking environment• Replicating model outside of SA• Suppliers wanting to deliver more product in prepaid format• Customer wanting to transact more in a prepaid world• Merchant ability to hold more stock as it is virtual• Organic growth company• Acquisitive
11
Group Structure
Blue Label Mobile
Cellfind
Content Connect Africa
Mobile Services Company
Blue Label South Africa
The Prepaid Company
Ventury
Blue Label Distribution
The Postpaid Company (75%)
Crown Cellular
Bela Phone Company (51%)
Blue Label International
African Prepaid Services (72%)
Gold Label
SharedphoneInternational (50.1%)
Blue Label Mexico(70%)
APS Nigeria (51%)
Oxigen Services India (37.22%)
Ukash(15.79%)
Blue Label Technology
Activi Technology Services
Blue Label One
Activi
TransactionJunction (60%)
Blue Label Solutions
Datacel
Blue Label Procurement (50%)
Velociti
Blue Label Data Solutions (81%)
CNS Call Centre
100% unless otherwise stated
12
Nature of Business
• Intelligent switch
• Digitising cash
• Neutral aggregator of products and services enabling open
loop transactions
• Hardware agnostic
• Product and services agnostic
• Scalable, robust and transferable proprietary technology
• Beyond bricks and mortar
• Banking the unbanked – financial inclusion
• Mobile enablement
13
Mobile Devices
BLUE LABEL DISTRIBUTION
POS Terminal Vending Machine Touch Screen
Bulk Voucher
Integrated GatewayKiosk
Natural barriers to entry
14
PRODUCTS / SERVICESBlue Label or Third Party
AirtimeUtilities
(electricity / water)
OTHERInsuranceGift voucher, Loyalty card,
etc
Bill payments /
EFT
Airline tickets, bus
tickets
Wholesale MainRetailers
Independent Retail Kiosks Informal Retail
BLUE LABEL TECHNOLOGY PLATFORM(AEON)
POSTILION
Financial Institutions
Snapshot
• 1,620 employees
• >130,000 POS devices in SA
• >1 million POS devices globally
• Key markets: South Africa, India, Mexico and Nigeria
• Listed on JSE in November 2007
• Over R5 billion market cap
• Free float ~ 45%
• 766 360 894 shares in issue
• Stated strategy:
- 50% profits outside of SA
- 50% profits from non-telephony products
15
The Financials
David RivkindFinancial Director
16
SA Distribution Revenue 2010
By network By product
Vodacom57%
Cell C8%
MTN31%
Telkom4%
Electricity0.2%
Airtime98.2%
Other0.2%
Starter packs1.4%
17
Prepaid Airtime - revenue
R-
R200 000 000
R400 000 000
R600 000 000
R800 000 000
R1 000 000 000
R1 200 000 000
R1 400 000 000
R1 600 000 000
R1 800 000 000
2010 2009
R0
18
Prepaid Electricity – monthly growth
R 0
R 50 000 000
R 100 000 000
R 150 000 000
R 200 000 000
R 250 000 000
* The group does not account for revenue on face value on electricity but only the commission received
19
SA Distribution Revenue 2010
By network By product
Vodacom57%
Cell C8%
MTN31%
Telkom4%
Electricity0.2%
Airtime98.2%
Other0.2%
Starter packs1.4%
20
Revenue
• Blue Label Mexico – 70% equity holding• Africa Prepaid Services Nigeria – 36.72% effective holding• Excludes revenue of associates
• Call Centres- Rationalisation - Impairments- Extraneous costs
• Location based services - 600k subscribers- Annuity driven
• Mobile content
INTERNATIONAL REVENUE – R1.2bn
OTHER RELATED SERVICES – R217m
21
Gross Profit Margins - Pre and Post IFRS adjustments
22
EBITDA
23 23
Interest expense and income
24 24
Working Capital Cycle
Positive cash generated from operating activities
• Average creditor terms – 40 days
• Average debtors terms – 21 days
• Average stock turn – 13 days
25
• Maiden dividend declared in August – 12c per share• Target of 3 to 4 times cover • Acquisitions, capex, working capital requirements and share buy backs
will be taken into consideration
• R80m per year – POS devices• R30m per year – technological development
• Nigeria tax holiday for 5 years• Average tax rate lower than 28% for the group
DIVIDEND POLICY
CAPEX
TAX RATE
26
Network Contracts
27
VodacomCell-CTelkomMTNNeotelVirgin MobileMultilinksZainEtisalatGlobacomStarcomms
27
Blue Label South Africa
Bradley TurkingtonBlue Label Distribution, Chief Sales Officer
28
What we do
Retailers
Lotto points
Bank branches,stores, etc.
Filing StationsChain stores
•Bank branches
•Large Retail groups
•Local Retail outlets
•Fuel and Filing stations outlets
•Wholesale outlets
•Moms and Pops , Informal Kiosks
•National Government offices –Post Office
Traditional retail networks have difficulties expanding their coverage and achieving deeper penetration of the pyramid due to operational, technical and economic limitations imposed by traditional business models
General Markets Distribution Segments
130,000’s micro-outlets
29
Unique capabilities that allow us to achieve an unprecedented level of
penetration
What we do, cont.
30
Value proposition
31
The typical consumer
• First world products and services available to emergent and aspirant consumers with flexible payment options
• Convenient, accessible outlets to purchase products and services• Cost effective and trustworthy products and services• Budget conscious – prepaid is that ultimate budgeting tool
Blue Label enables unbanked and under-banked consumers to access first world
products and services, conveniently and pay in a manner that suits their lifestyle
32
Consumer
POS Terminal
Vending Machine
Touch Screen
Integrated Gateway
Bulk Printing
Mobile Phones
Retail Channels
AEON Platform
Blue LabelTechnology
• Airtime
• Electricity
• Money transfer / Remittances
• Bill Payments
• Lotto
• Transport Ticketing
• EFT
• Insurance, funeral cover
• Loyalty / rewards
Product and Services
How we work
33
POS Terminal
Vending Machine
Integrated Gateway
Touch Screen
Mobile PhonesMobibiilelele PP P hhohonenenesss
Bulk Printing
Our vending devices
34
POS Terminal
Vending Machine
Integrated Gateway
Touch Screen
Mobile PhonesMobibiilelele PP P hhohonenenesss
Bulk Printing
Our vending devices
Integrated Gateway
AEON Platform
Integrated to POS softwareeg Arch, Pilot, SA Cash
35
POS Terminal
Vending Machine
Integrated Gateway
Touch Screen
Mobile Phones
Bulk Printing
Our vending devices
Free Standing Vending Machine• Simple and convenient to operate
• Increase sales and reduction in operating costs
• No risk from fraud and theft
• Financial management
•
•
•
•
36
POS Terminal
Vending MachineMobile Phones
Integrated Gateway
Touch Screen Bulk Printing
Mobibiilelele PP P hhohonenenesss
Our vending devices
Touch Screen Terminals• High turnover retailers for fast service• Separate cash box for effective cash management• Product dispensing is fast and easy• Full reporting functionality• Automated stock management and replenishment using GPRS• Web-based management• Staff shift management
37
POS Terminal
Vending Machine
Integrated Gateway
Touch Screen
Mobile PhonesMobibiilelele PP P hhohonenenesss
Bulk Printing
Our vending devices
Point of Sale Dispensing Terminals• Features:• User friendly menu• Excellent shift and stock controls• Multiple levels of security access, sales analysis and reporting functionality• Efficient and secure transaction processing• Benefits:• High margins• Reduced risk of fraud ad pilferage• Continuous availability of vouchers• Maximum return on invested stock• Full audit trails• Accessibility to any voucher denominations• Manual and automated ordering menus• Automated reporting systems
38
POS Terminal
Vending Machine
Integrated Gateway
Touch Screen
Mobile Phones
Bulk Printing
Our vending devices
Mobile Phones• mobiWallet
• Full-featured mobile wallet
• Primarily for B2B market
• Multiple top-up and payment methods
• Multiple products and services
• Money transfer and banking capabilities
• Multi-channel access (Java, WAP, USSD, www)
• mobiMerchant• Mobile-based merchant solutions
• mobiSecure• End-to-end security for mobiWallet
and mobiMerchant
39
POS Terminal
Vending Machine
Integrated Gateway
Touch Screen
Mobile PhonesMobibiilelele PP P hhohonenenesss
Bulk Printing
Our vending devices
Bulk Voucher PrintingConverts virtual vouchers to physical vouchers on the customers premises• Quick real-time deliveries through GPRS connectivity• Downloads 500 vouchers every 2-3 minutes• Prints 1000 vouchers every 15 minutes• Multiple users• Password protected• Data list of customer purchases• Sales reports and printed stock reports• Full accounting documentation• Weekly / monthly sales and purchase reports• Small and compact
40
Product and Service Partners
CCA
City power
41
Mobile Devices
BLUE LABEL DISTRIBUTION
POS Terminal Vending Machine Touch Screen
Bulk Voucher
Integrated GatewayKiosk
How we work
2010/09/14 42
PRODUCTS / SERVICESBlue Label or Third Party
AirtimeUtilities
(electricity / water)
OTHERInsuranceGift voucher, Loyalty card,
etc
Bill payments /
EFT
Airline tickets, bus
tickets
Wholesale MainRetailers
Independent Retail Kiosks Informal Retail
BLUE LABEL TECHNOLOGY PLATFORM(AEON)
POSTILION
Financial Institutions
Our distribution footprint
43
New Products
• Prepaid Electricity (UniPIN)
44
UniPIN: Process Flow for Electricity Purchase
45
New Products
• Prepaid Electricity (UniPIN)
• Money transfers, such as M-PESA
46
M-PESA
Additional Outlet Tills
and Assistants
Outlet Assistant (Primary)
Outlet Till (Primary)
Outlet Assistant (Primary)
Outlet Till (Primary)
Vodacom M-PESA Head Office
Setup and manage Outlets
Outlet Head Office
Management of Float Accounts and Commissions
Office Terminal
e al
Office AssistantA
OutletInteract
with Vodacom M-PESA
Customers
OutletInteract
with Vodacom M-PESA
Customers
Additional Outlet Tills
and Assistants
AO
A
AO
A
Blue Label
Merchants
Vodacom
47
New Products
• Prepaid Electricity (UniPIN)
• Money transfers, such as M-PESA
• Mid-tier bank products
• Electronic Funds Transfer
• Lotto
• Bill Payments
• PINless
48
Pinless recharge
Billing Engine
PIN confirmation
49
New Products
• Prepaid Electricity (UniPIN)
• Money transfers, such as M-PESA
• Mid-tier bank products
• Electronic Funds Transfer
• Lotto
• Bill Payments
• PINless
• Technology solutions – Symantec forsmart phones
2010/09/14 50
Evolution of business model
Platform
Solution Provider
Product distributor
In-house
Third party
Products &services
51
Blue Label Technology - AEON
• Online• Offline
• Consignment• Wholesale
• PIN Generation
• Electronic Funds Transfer
52
Growth
• Ongoing expansion of presence
• Electricity
• Transport
• Money transfer
• Mobile merchant
• Mobile applications for retailers / bankers / corporates
2010/09/14
53
Blu Approved – the BLU stamp of approval
For consumers
For retailers
For investors and partners
� Able to purchase airtime, electricity, transport tickets...all the BL offerings
� Service is trustworthy and offered at a competitive rate� Service is easy to use
� Attracts consumers into their store� Supported with marketing from Blue Label and our partners to
increase sales
� Able to SEE the full extent of Blue Label’s distribution footprint
54
Blue Label International
JJ BothaGroup Exec: International, Business and
Strategy
55
Market Approach
Raw Country Data
Per country/per service: – refined criteria scores
Core criteria –calculation formulas
Weighting:� Service importance;� Criteria importance; � Actual score per criteria
band level
Per country: aggregate score & ranked (sum of criteria scores)
Per country/per service: criteria scores –placed into ‘score bands’
Distribution• Footprint
Core Products• Vouchering• Couponing• Acquiring• Settlement
Other Products• Mobile content and
VAS• Messaging
56
Current Decision Matrix
Market Known Challenges and Risks
Territory Investment Competitors(Main
Identified)Emerging market player and positioning
Regulation in territory (Major compliance issues, Timelines to implement, ease of currency exchange, Corporate Tax, Employment dependencies)
Competition within Segments
Revenues possible, shape and phasing of revenues
Review of business – age , current strategy, alignment
Size of qualifying market (Population,GDP, outlet topology)
Financial - issues with Organizational requirements
Specific investment coststo enter markets
Current positioning
Size of core segments (airtime, electricity)
Development & Ops – know customizations and localization challenges
Size of CORE target segments
Administrative and Overhead burdens (cost of sales, margins, staffing)
Size and Suitability of existing channelsin market
Macro Risks – economic and Political
“Barriers to entry” /Major Risks
Market specific trends and market maturity with the associated pressures
Territories estimated suitable for other products (mobile content &vas)
Management Burden –partnership model and relationships, time zones
Matrix is weighted and scored – Potential matched to resources57
Country Implementations
Resources,Systems,Process
Matrix review
QUALIFIED TARGET
POPULATIONONLINE FRAUD
FEAR
END-USER ONLINE
ACTIVITY: IMPT. SECTOR
REDEMPTION CHANNEL
ISSUING CHANNEL
Other UKash (Future)
Products: Sales
Potential COMPETITION REGULATIVE FINANCIALDEVELOPMENT
& OPS
TERRITORY's BROAD
ENVIRONMENT RISKS
ADDITIONAL MANAGEMENT
BURDEN
REGION 1: ASIA -6379650Bangladesh -249050 300 100 0 100 500 0 0 125000 0 50000 50050 25000Brunei -246700 300 25000 0 100 500 25000 0 125000 125000 10000 12600 25000Cambodia -349050 300 100 0 100 500 0 0 125000 125000 50000 25050 25000China -161950 87500 100 0 100 50400 25000 0 125000 125000 25000 25050 25000
Example extract
BLT Core • Consideration
of core focus of staffing and systems
BLT International • Operational
management and evaluation
• Market evaluation and re-evaluation of factors
• Product and service enhancements
Putting it all together
58
Our product value propositions
AirtimeOther Products
Remittances, Wallet, Kiosk
Lotto Bill payments Others, mobile VAS
Description Mobile phone and long distance pre-paid airtime
Cross-border remittances (both cash and targeted)
Electronic based lottery
Electronic payments of products and services
Other products and services that leverage BLT network
Value proposition to retailer
Very high• Reduced inventory risks• Virtual shelf• Lower working capital• Door to technology
High• Increased
product offering• Lower
operating costs
High• Products that otherwise can’t sell
• Expanded footprint• Traffic generator • One stop shop
Value proposition to end user
Medium• Enhanced proximity• Receipt• Lower denominations• Instant confirmation
Very high• Control over
spending • Large footprint
on both ends
High• Convenience
• One stop shop• Enhanced security / reliability
• Enhanced control
Target partners
• Telecom players• Pre-paid long distance
resellers• Value-added content
sellers
• Smaller remmitance players
• Key items on share of wallet
• Lotto organizations
• Value storage cards
• Utilities• Pay TV• Government
• Courier companies
• Banks • Web payment
companies• D2C
59
Value add of various business modules
286.8
257.3
660.1
271.6
435.4
1 911.2
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
Mexico airtime Mexico otherproducts
USA airtime USAremittance
LATAM TotalEnterprise
Value
Company valuation
Airtime
By leveraging footprint, device capability and technology platform, significant scalability and enterprise valuation is achieved
Lotto
Other, mobile VAS
Remittances, Wallet and
Kiosk
Bill Payments
Lotto
Value
60
Business Lifecycle plan
ExpandRemittanceWallet , Kiosk
New Products
Other products
Airtime
• Selling airtime in all POS
• Grow own network
• Alliances with other networks to speed deployment
• Expand product offering
• (Electricity, bill payments, lotto, Other prepaid)
• Further expand network with alliances footprint
• Mobile VAS
• Expand footprint to corridors to leverage platform capability
• ISOs
• Migrant population
• Mobile Content
• Leverage BLTs footprint in countries
• Leverage technological edge to offer cross-border products
• Introduce bundled product settlement
• Expand into selected countries with similar strategy
• Opportunistic local partnership driven growth
Ongoing Phase 2 Phase 3 Throughout 2012 +
61
India
62
India
• Highly competitive• Margins under
pressure due to Teleco price wars
• Decreased reliance on airtime
• Expansion of product offering
• Footprint expansion • Target new markets
India: The Market
63
India: Key Pillars Focus
India Market Focus
Area Centric
Market Penetration
New product and
Technology Platforms
Banks
• Achieve Exponential Market• Cover all metros• Increase market presence• Distribution through Verticals • Market reach <1%
• Must have reach in territory 5%
• 2012 – 2013 , Target market share 5%
• Promotion of SMS vending solution in low coverage areas
• Introduce new generation GPRS terminals
• Expand Oxirail accounts• Cash Card
• Access Banks account holders to promote Oxi products.
• Expand BC model to become Cash in and Cash out
64
India: Key Growth Areas
ExpandRemittanceNew Products
Other products
Airtime
• Selling airtime in all POS
• Grow own network through mobile vending
• Bill payments
• Expand with regional small stores and logistics
• Co-operative Banking,
• Mobile wallet solutions
• Mobile Kiosk –State Bank of India. Rural Banking
• Java Client –enables deeper reach than Kiosk
• National ID
• Leverage BLTs footprint in countries
• Leverage technological edge to offer cross-border products
• Migrant population
• Expand product offering and footprint through out States
65
India: Lifecycle Snap Shot
Mobile Wallet and Kiosk
Other Products, Bill payment
AirtimeFootprint
Lifecycle – Snap shot
66
Mexico
67
Mexico
*blended ARPU Source: Wireless Intelligence
Mexico: Background and Overview
• Formed in June 2008, began trading in March 2009• Joint venture between Blue Label Telecoms and Nadhari, S.A• Installed base of terminals is over 4000• Annualised sales of about US$40 million• Pursuing organic growth by expanding terminal footprint • Footprint expansion strategy through partnerships in which it applies
its network and platform to solve or optimize partner’s operations -partners have significant market presence, which BLM seeks to leverage
• Product portfolio will reach into lottery, bill payment and parcel packaging solutions
• Currently structuring a trial in the USA which will leverage capability of providing cross-border products to a specific niche
68
Mexico: Key Pillars Focus
10 780
8 887
7 831
1 796
1 663
1 400
1 239
1 191
1 000
891
357
3 814
Banking …
Pemex
Oxxo
BBVA
Banamex
Telegraph …
WalMart Group
HSBC
7-Eleven
Elektra
Famsa
BLM Jul-10
BLM Dec-10
BLM Jul-15
7 83
11111111 111111 11111111 1111 111 111111111 77779777779797979797977797777777966
1 663
1 400
1 239
1 191
1 000
889888888888888888 1
357
3 814
DriversMarket
Penetration
• Review Terminal performance
• Footprint
69
Mexico: Key Pillars Focus
Drivers
Quality of Service
Market Penetration
New product and
Technology Platforms
Banks
• Review call centre support• Coverage and communication
stability• Deposit allocation management• MIS systems
• Review Terminal performance
• Footprint
• Multiple products offered• Increase Bill Payments
offering• Solution sets in non-
traditional verticals (egwaybills)
• Banking co-operative solutions
• Develop mobile wallet, kiosk solution sets
70
Mexico: Key Growth Areas
ExpandRemittanceNew Products
Other products
Airtime
• Selling airtime in POS (network rules being challenged)
• Grow own network
• Alliances with other networks to speed deployment
• Lottery on POS
• Limited Bill payments
• Roll out in Gasoline stations
• Expand with regional small stores and logistics
• Inventory management and Waybill solutions
• Co-operative Banking,
• Mobile wallet solutions
• Leverage BLTs footprint in countries
• Leverage technological edge to offer cross-border products
• Introduce bundled product settlement
• Migrant population
• Expand into selected countries with similar strategy in LATAM
Dec 2010 Q 2 2011 Trial phase & investment made
71
Mexico: Lifecycle Snap Shot
RemittanceProducts
CorridorOther Products, Bill payment
AirtimeFootprint
Lifecycle – Snap shot
72
Nigeria
73
Nigeria
Source: BMI
APS Nigeria: Background and Overview
• Commenced operations May 2009• Effective shareholding at 36.72%• Exclusive distribution of Multilinks products• Further agreements with Nigerian networks for distribution of
recharge, including ZAIN, GLO, Etisalat, Starcomms• Establishment of solid relationships with the largest dealers in
Nigeria ensuring national distribution footprint• Implementation and pilot of virtual technology for bulk printing and
POS in October 2010
74
APS Nigeria: Key Pillars Focus
Key Drivers
Value Proposition -
Dealers
Market Penetration
New product and
Technology Platforms
Operators
• One device, multiple networks, multiple products, one investment
• Virtual secure vending• Leverage Group technology,
devices and terminals
• National Multilinks• EVDO• Mass market recharge• Virtual distribution• Bulk printing via bulk mailer
• Introduce Virtual Distribution
• Low cost terminals US$200 to US$ 90
• Mobile Merchant• Device market early stages
compared to other countries
• All operators• National Vending• Pilot phase end Oct – rollout Nov
2010
75
APS Nigeria: Lifecycle Snap Shot
Other Products, Bill payment
AirtimeFootprint
Lifecycle – Snap shot
76
Ukash: Background and Overview
• Smart Voucher Ltd was founded in 2000 as an Electronic Vouchering System – offering retailers and internet businesses “white label” eVouchersolutions to replace gift tokens and paper vouchers
• In 2005, Ukash was created as a general purpose Electronic Money product, designed as an electronic surrogate for notes and coins online in the UK
• Over the past 5 years, Ukash has grown exponentially and is serves over 50 international markets on 6 continents
77
Ukash: Key Pillars Focus
Drivers
Cost Management
Market Penetration
New product
Money Transfer
• Review overheads• Global expansion reviews on
market entrance methods • Russia and South America
• Unique positioning of largest emoneynetwork
• Target Corridors
• Cash deposits into Prepaid Cards
• Mastercard• Virtual Prepaid cards
• Money Transfer • Develop mobile wallet, Kiosk
solution sets
78
Ukash: Key Drivers
UnbankedLow Card Penetration
Move to Cash Spending
Paid Online Content
Cash
• Target Cash in Circulation -€800bn in EU
• Grow own network
• Alliances with other networks to speed deployment
• Broadband
• Online Gambling
• VOIP access
• Mobile Content
• MMORPG
• Convenience and Control
• Security and Privacy
• Not Credit
• Youth Segment
• Vouchers is alternative
• 60% of Europeans do not have access to cards
• Financial Services license provides access for under and unbanked
Ukash – Prepaid voucher for spending cash online (directly integrated merchants)Ukash NEO – Prepaid Virtual MasterCard (all other merchants)
79
Ukash
Vouchering and Couponing
Mobile WalletOther ProductsFootprint
Lifecycle – Snap shot
80
Sharedphone: Key Pillars Focus
Key Drivers
Value Proposition
Market Penetration
New product and
Technology Platforms
Terminals
• One device, multiple networks, multiple products, one investment
• Virtual secure vending • Global Opportunity• Community based pay
phone original market entry• Strategic co-operative
licensing
• Complete administration system
• Flexible integrations• Mobile Merchant• Multiple product vending –
Market specific
• Low cost solution <US$90• Printers and Handsets owned IP• SIM slave , flexibility• Terminal opportunity - RICA
81
Sharedphone
ExpandMobile walletOther Products, terminals, appsDevice
development
Lifecycle – Snap shot
82
Blue Label Technology
Dr Angelo RoussosGroup Chief Information Officer
83
Overview
BLTS Group Technology is responsible for the Group’s CoreTechnology systems and its objective is to develop, deploy andsupport the technology platforms within BLTS - as well as a number of3rd party partners
The Core Technology service offering includes:
• The facilitation of Secure Financial Transactions • The provision and enablement of various types of Secure e-Tokens • The Operational Support of these e-Token and Transactional
Systems• Device and Customer Field support (now managed by Group
Operations)• Hosting and Management of IT infrastructure • Manufacturing and maintenance of Devices in the Field (now
managed by Group Operations)
84
Develop commercially viable and functionally rich transaction engines
Provide stable and robust platforms, and support thereof
Optimise technology investment
Standardise platforms and deployments - architecture, processes, templates and
methodologies
Retain and develop skills
STRATEGY
85
Structure (excludes Mobile/B2C)
BLTS CIO
Blue Label South Africa
Project Office
Finance & Centre of Excellence
Blue Label International
Blue LabelMobile
Blue Label Technology
Core Technology
Development & Operations
Infrastructure & Hosting
ACTIVI
Transaction Junction
BLTS Technology & Architecture Working Group
86
Operational Capabilities
EFT Switching Platform
EVD/VAS Platform(Pin Generation &
RedemptionBulk Print
ConsignmentUtilities & Bills)
(Pin GenRedeBulk
ConsiUtilities
Card Management Platform
(Gift CardsLoyalty)
Card MaPlat
(Gift
Group MIS (and Accounting /
Financial Management)
Platform
Core IT Infrastructure & Operational Support
EFT Switching Platform
S PlatformS Platformneration &mption
k Printgnments & Bills)
nekis
Loyalty)alty)Loy
Group MISISAccounnt
FinanncManageem
Platfoor
Core IT Infrastructure & Operational Support
87
AEON
Mobile Devices
BLUE LABEL DISTRIBUTION
POS Terminal Vending Machine Touch Screen
Bulk Voucher
Integrated GatewayKiosk
PRODUCTS / SERVICESBlue Label or Third Party
AirtimeUtilities
(electricity / water)
OTHERInsuranceGift voucher, Loyalty card,
etc
Bill payments /
EFT
Airline tickets, bus
tickets
Wholesale MainRetailers
Independent Retail Kiosks Informal Retail
BLUE LABEL TECHNOLOGY PLATFORM(AEON)
POSTILION
Financial Institutions
Consolidated BLTS Switch
• Voucher Issuing• Voucher Redemption• Stored Value• Transaction Processing
(EFT/VAS
Core BLTS Transactional Platform
Rapidly Deployable
• On-site – South Africa / International
• ASP – South Africa / International
Rapid Services Provisioning
AEONSwitch
AEON merchant terminal
management system & EVD
Std Account Interface Database
Account Package
3rd party host to host
88
AMSProtocol
JSON API
Esocket.POS
GSM Networks (Tokens)
Devices
SpectraNurit
Touch screenVending Mach
ATM
Gateway
Interfaces
Term App
Ukash (Tokens & Online)
GSM Networks(Top-up)
Electricity
Banks
Lotto
RSC
Drawcard
Tutuka
Bill payment
Ukash (Online)
DeviceMng #
BusinessRules #
TransactionManagement
3rd PartyConnectors
Merchant Mng #
Accounting#
SettlementPostilion Realtime
Postbridge Source
PostilionOfficeRecon
DeviceMng #
BusinessRules #
TokenManagement
Token ImportMerchant Mng #
Accounting #
Switch
AltechCKSFNB
POS
PilotArch
RetailixRetailman
Wincor Nixdorf
PostbridgeSink
AEON – EVD
AEON Switch
Postilion
yy
Partners
CAPSKwikpay
VVXML API
Other (Tokens)
AEON
89
Electricity Vending
UNIPIN
90
Transaction Junction
STRUCTURE� Cape Town based� Over 50 of years collective experience in EFT both on a local and
international level.
OBJECTIVE� Develop, enable and deploy secure transaction solutions, services
and technology� Pro-active transaction processing and management.
SERVICES
AND
SOLUTIONS
� Robust post-transaction data processing.� Integrated Value Added Services. � Comprehensive Suite of Transaction Junction Products.� System implementation and integration.� Management and support.� Project management and consultancy over the full range of
Postilion products.
PROVEN
TRACK
RECORD
91
POSATMVoice
Internet
NetworkHost
systems
Fileimports
Reconciliation files
Fileextracts
ACH
General ledger
Fileextracts
Generalledger
Reports
Fileloads
Fileextracts Card
production company
eSocket.POS
eSocket.web
eSocket.ATM
Transaction Junction: Postilion Experts
92
Transaction Junction: Services and Solutions
• Services- System implementation- System integration- Management and Support- Project management and consultancy - Full range of Postilion products:
• Postilion Realtime• eSocket.POS/WEB/ATM• Postilion Office• PostCard
93
Transaction Junction: EFT and VAS Network
94
Key Highlights for 2009/2010
Enhancement of core service capabilities and integrations through AEON
Final phase of integration and rollout of Navision in most South African business units/subsidiaries
Implementation of MIS system - first phase due for completion by end-October 2010
Ukash online now in place through retailers including Pick n Pay and Shoprite
Lotto integration now live with Shoprite and via Mobile partners
Successful rollout of Electricity UniPin in South Africa – to be significantly expanded during 2010
Successful e-Top Up integrations to Cell C and Vodacom – have begun online integrations into Telkom and MTNConclusion of Telkom / BLD agreement to provide all soccer stadiums in SA with self service Vending machines
Provisioning of self service vending machines for the Gautrain project.
Rica systems are now stable, and BLD has deployed in excess of 5500 devices
Mexico integrations well on track, and POS deployments have now exceeded the 3000 installed device base
95
Blue Label MobilePower to the People
Dr David FraserGroup Chief Technology Officer
96
97
WHY?
Objective 1 – Convert customers into merchants
… and offer merchant and consumer services through ONEenvironment
99
Objective 2 – Expand Reach - products to the people
Young Widely distributed
100
Objective 3 – Expand Contact - products to the people
Blue Label PoS
130,000
PoS PoP ~600,000
Mobile SIMs 55,000,000
1
10
100
1 000
10 000
100 000
1 000 000
10 000 000
100 000 000
The South African Example
101
Blue Label SA PoPs = 2 x Ellis Parks
102
SA Mobiles = 900 x Ellis Parks
103
World Mobiles
104
Objective 4 – Increase service and product range
• Downward pressure on margins
• Limited product range• No end-customer loyalty or
emotional attachment• B2B service
• POS & Integrated Channel • Mobile Channel
• Downward pressure on margins offset by higher margin VAS and transactional services
• Unlimited product range• Customer loyalty &
emotional attachment• B2B, B2C and B2B2C
services
NEWTRADITIONAL
105
Warren Buffet
“You do not need to own the road, only the tollbooth on the traffic artery.”
MERCHANT
MERCHANT
MERCHANT
MERCHANT
MERCHANT
106
HOW?
Mobile Solutions Platform
Core Transactional Platform
Handset Solutions
108
Blue Label Mobile Solutions Platform
BACKENDHOSTS
Encryption
iVERI INTEGRAT CELLFIND MOBILECOMMON
FEE OBS
CURRENCY AUDIT LOG
AIRTIME SMS DELAYEDMESSAGING
PARTNER
PORTAL PROFILE
IMAGE
REWARD
LIVE ID UKASH
VENDOR WALLET
ADMIN
TRANSACTIONAL
BALANCE, PAYMENT, TRANSFER, HISTORY
Credit /Debit cards Paypal UKASH EFT / Debit
Order P2P
INSTANTMESSAGING System Chat Chat Rooms
NETWORKOPERATOR OBS SMS USSD
ADVERTISING Serve Ad Ad Event
PRODUCTS Pin BasedAirtime
PinlessAirtime
Pre-paidElectricity CONTENT CMS Portal UGCCLASSIFIEDS Category
Management Browse Post Feeds / Polls /Surveys
MSC ID
Session
Identity
CHIRPME Particle Subscribe Moderate CALLINK Call Saver Top-up
MOBILE BROKER GATEWAY User Session GatewayStateManagement
ConnectionManagement
PluginManagement
WAP WEB3rd PARTIESJ2ME MobileONEAPP Mobile MOBILE POS USSD
LIVE ID
DigitalFingerprint
PAAS & SAAS WEB SERVICES
SECURITY
PAYPAL
USSDProxy
ServiceManagement
SessionManagement
CHANNELS
PROXY LAYER
EXTERNAL HOSTS LAYER
AEON JSON TEBA TRANSACTIONJUNCTION PPE Host
TRUTEC
CAMPAIGNSREWARDS
Hook &Trigger
Reward& AwardCampaign
COMMONLIBRARY MCC MNC MSISDN
ROLLBACK AUDIT LOG
TransactionVerification
TransactionFulfillment
IMAGEINTERFACE
Folders Images
USER Identity Profile Metrics
HANDSETS Detect Manage ClassifyPeer 2 Peer
Compression DigitalCertificate
CONTACTS Import Group Manage Profile Invite Message
LBS
Cell ID Position
Games
Pay 2Play
Free 2Play
Referals
mCOMMERCE Wallet Accounts Currency Shop VendorTop-up Pay Partner LimitsSchemes
Encryption
MOBILEMERCHANT
MerchantIdentification Authentication XML Translation Mobile
FilteringMobile Report
DeliveryADMINSYSTEM
Users, RolesPermissions
Partners &Permissions
Groups, MenusPortal Tools ReportingSystem
WAP WEB3rd PARTIESJ2ME MobileONEAPP Mobile MOBILE POS USSD
CHANNELS
Channels
CCHHIIRRPPMMEE PPaarrttiiccllee SSuubbssccrriibbee MMooddeerraattee CCAALLLLIINNKK CCaallll SSaavveerr TToopp-uupp
MOBILE BROKER GATEWAY User Session GatewayStateManagement
ConnectionManagement
PluginManagement
USSDProxy
Servrr iceManagement
SessionManagement
PPRROOXXYY LLAAYYEERR
Compression DigitalCertificate
Encryption
Proxies & Service Brokers
TRANSACTIONAL
BALANCE, PAYMENT, TRANSFER, HISTORY
CCrreeddiitt //DDeebbiitt ccaarrddss PPaayyppaall UUKKAASSHH EEFFTT // DDeebbiitt
OOrrddeerr PP22PP
IINNSSTTAANNTTMESSAGING System Chat Chat Rooms
NNEETTWWOORRKKOPERATOR OBS SMS USSD
ADVERTISING Servrr e Ad Ad Event
PRODUCTS Pin BasedAirtime
PinlessAirtime
Pre-paidElectricity CONTENT CMS Portal UGCCLASSIFIEDS Categoryrr
Management Browse Post Feeds / Polls /Survrr eys
CCAAMMPPAAIIGGNNSSREWARDS
HHooookk &&Trigger
RReewwaarrdd& AwardCampaign
COMMONLLIIBBRRAARRYY MMCCCC MMNNCC MMSSIISSDDNN
ROLLBACK AUDIT LOG
TTrraannssaaccttiioonnVVeerriiffiiccaattiioonn
TTrraannssaaccttiioonnFFuullffiillllmmeenntt
IMAGEIINNTTEERRFFAACCEE
FFoollddeerrss IImmaaggeess
UUSSEERR IIddenttiitty PProffiille MMettriics
HANDSETS Detect Manage ClassifyffPeer 2 Peer
CCOONNTTAACCTTSS Import Group Manage Profile Invite Message
LBS
Cell ID Position
Games
PPaayy 22Play
FFrreeee 22Play
Referals
mCOMMERCE Wallet Accounts Currency Shop VendorTop-up Pay Partner LimitsSchemes
MOBILEMMEERRCCHHAANNTT
MerchantIdentification Authentication XML Translation Mobile
FilteringgMobile Report
DeliveryyADMINSSYYSSTTEEMM
Users, RolesPermissions
Partners &Permissions
Groups, MenusPortal Tools ReportingSystem
Platform as a Service (PAAS)Software as a Service (SAAS)
BBAACCKKEENNDDHHHOOOSSSTTTSSS
iVERI INTEGRAT CELLFIND MMOOBBIILLEECCOOMMMMOONN
FFFEEEEEE OOOBBBSSS
CURRENCY AUDIT LOG
AAAIIIRRRTTTIIIMMMEEE SSSMMMSSS DDEELLAAYYEEDDMMEESSSSAAGGIINNGG
PARTNER
PPPOOORRRTTTAAALLL PPPRRROOOFFFIIILLLEEE
IMAGE
RRREEEWWWAAARRRDDD
LIVE ID UKASH
VVVEEENNNDDDOOORRR WWWAAALLLLLLEEETTT
ADMIN
PPPAAAYYYPPPAAALLL
AEON JSON TEBA TTRRAANNSSAACCTTIIOONNJUNCTION PPE Host
TRUTEC
Core Transactional & External Hosts
Enccrypttion
MMSC ID
Seessioon
Iddentity
LIVE IID
DDigitaalFinggerpprint
SSSSSSSSSECCURRITY
Security
109
Blue Label Mobile Solutions Platform
Proxies & Service Brokers
Platform as a Service (PAAS)Software as a Service (SAAS)
Security
110
mobiWallet, mobiMerchant, mobiSecure
111
mobiWallet, mobiMerchant, mobiSecure
- mobiWallet (personal m-wallet)- mobiMerchant (cellphone-based merchant solutions)- mobiSecure (end-to-end security for the above)
112
Wallet Structure – what people are used to
Wallet
Accounts
Cash
113
mobiWallet
•Multi-channel Access• Java• USSD• WAP• Web
114
mobiWallet
115
mobiMerchant - Turning customers into merchants
• Anyone can be a merchant• With their existing phone• And their existing SIM• Enabled over-the-air• Access to merchant service via
• Java, USSD, WAP, WEB• Generate personal business from
products and services sold• Operate as money transfer agents• Take services to deepest rural
communities• No long term obligations or high
barriers to entry (cost, devices etc.)
116
• Stand-alone Java applet or USSD
• Fully integrated with Blue Label’s Core Transactional and Mobile back-ends
• Full reconciliation,multi-tiered merchant solution with multiple operator support
mobiMerchant
117
NEXT?
What next?
• Globally, a “young” population prefers to use the mobile channel
• Mobile eco-system owners will be the landlords of future
• Technology is key to unlocking value but will be like an iceberg – mostly hidden
• Highly integrated mobile offerings will be key tipping point for merchant uptake
• The service provider will be the “bank” • Alternative payment networks will form
through coalition and peer-to-peer networks
• Transactional intelligence will be the new “currency”
119
120
Blue Label Solutions
John HawthorneVelociti CEO
121
Blue Label Solutions Companies
Datacel• 2 operational companies:
- Velociti (call centre business)- Blue Label Data Solutions (data analytics services provider)
• And 4 non-operational entities:- Answers Direct (former call centre business, closed early 2009)- Datacel (former BPO business, ceased operations early 2009)
• still producing annuity income- Blue Label Call Centre (former call centre business, closed September
2009)- CNS (former call centre business, ceased operations May 2010)
• still producing annuity and building rental income
122
Velociti Introduction
• Full service inbound and outbound, sales and customer services BPO provider
• Established January 2006• 100% owned by Blue Label Telecoms Group• 760 seat facility in Durban with back-up facility in
Bloemfontein• Authorised Financial Services Provider • Level 5 BBBEE rated company• State of the art technology platforms• Blue chip client base• Key differentiators include
- Focus on being a partner not just a supplier to our clients
- Culture of development and empowerment- Quality customer experiences and industry leading
sales performance are a cornerstone of our business
A proud member of the Blue Label Telecoms Group123
Velociti Structure
CEO John Hawthorne
CIO
Business Intelligence IT QA & PM
COO
Finance Outbound Ops Inbound Ops CRM
Employee Relations
Training & Development HR Communications
Officer
124
� Focus on building brand equity with clients through effectively managing their clients’ lifecycle from acquisition through to retention
� accomplish this through an intense internal focus on our people, operational processes, and technology
� Back office teams deliver client KPIs though recruiting, training and development, reporting and analytics, quality assurance, and client relationship management
� Passionate about the development of our people into service based leaders
Velociti Service Methodology
• Total Client Lifecycle Management - Execution of CRM• Bespoke tailor-made services and solutions• Industry best practice processes and methodologies
ACQUISITION�� Outbound Sales�� SalesPlus®�� Lead Generation
SERVICE�� Customer Service�� Jumpstart Program�� Loyalty Program
RETENTION�� Marketing Programs�� Contract Renewal�� Loyalty Program
GROWTH�� Up-sell & Cross-Sell�� Loyalty Program�� Acquisition
A proud member of the Blue Label Telecoms Group
� Build client’s brand� Improve brand loyalty� Improve customer experience
� Increase customer satisfaction� Increase customer spend� Reduce service costs
125
Velociti Current Footprint and Future Growth
� Outbound Campaigns� Virgin Mobile � Digicall (Altech Autopage)� Nashua Mobile� Absa Insurance� Transunion� Cellfind� The Post Paid Company� The Unlimited World
� Inbound Campaigns� TransUnion� iBurst� Pick n Pay � Cellfind� RICA � Cisco
� Launched 2 new campaigns in October� Recently filled over 15 new staff positions, all with internal applicants� Recent growth in second half of 2010� Robust sales pipeline with blue-chip growth – short term domestic, long term international� Focus on expansion of inbound business to match global focus on customer experience� Focus on expanding service offering into new industries and markets� At capacity in current site, sourcing new locations in Durban, Bloemfontein� Internal projects kicking off focused on improved QA methodologies, knowledge management,
agent coaching, and leadership development
126
Blue Label Data Solutions Overview
• Evolved into all-encompassing data solutions and delivery company
• Best practice approach to data services reduces complexity and risk to clients
• Aligned with Direct Marketing Association of South Africa to become compliant with all industry data protection bills
• Achieved sought-after DMA compliance accreditation
127
Background
• Transformation from raw data provider to full service data analytics provider
• Expanded beyond Group to providing services to blue chip clients
• Continued reduction in data costs through unique partnerships resulting in more cost effective data cleansing
128
Management Structure
Blue Label Data Solutions
Executive Chairman
Larry Pogir
CEO
Quintus Muller
Financial Director
Estelle Baard
129
Current Offerings and Key Growth Areas
• Supply of consumer data• Data profiling and analysis of new and existing client data• Contact update and data cleansing• Lead generation• Direct marketing and brand awareness• Email, SMS and MMS campaigns• Recent successes
- Continuous client growth and market share- DMA accreditation has ensured that we are a respected provider in an
increasingly regulated industry• Objective for the year ahead is to capitalise on these successes to
become one of the leading data specialist companies in SA
130
Blue Label Solutions Summary
Velociti• Change in executive management • Site expansion plans • Focus on changing with domestic market and preparation for return of international opportunities
Blue Label Data Solutions• Posted record profits in last financial year and continues to perform over budget• Providing diverse product offering through specialist partners in direct marketing industry•
While 2010 has been a tough year for the BPO industry in South Africa, we have weathered the storm and grown in this difficult environment
The future is bright for Datacel as we align internal and external resources with a common goal and vision to be market leaders for South Africa
131