Blue Label to sell its Mexico business

Blue Label Telecoms is set to dispose its 47.56% interest in Blue Label Mexico to its co-shareholder, Grupo Bimbo, for $11.5 million.

“This is in line with Blue Label’s strategy to refocus its efforts on its South African distribution businesses and to deleverage the business in order to ensure a more robust and liquid balance sheet going forwards,” the group said in a statement on Thursday (17 September).

Blue Label has endured mixed fortunes for its operations outside of South Africa, which includes Oxigen Services India, while it has also suffered enormous losses from its investment in local mobile operator, Cell C.

However, Cell C is no longer a feature following Blue Label’s decision to fully impair its exposure to the struggling operator, in 2019.

Blue Label Mexico is a multi-carrier for all networks. Part of its strategy is to redeploy underperforming devices and to retrofit mature devices to include financial services transaction capabilities in order to assist its business partners to become more competitive and productive.

Its product offerings include PIN-less recharge, direct top-up, bill payments, cash collections, card acquiring, digital food vouchers, sim card distribution, debit and credit card acceptances and international money transfers.

“The proceeds from the disposal of Blue Label Mexico will be applied to settle Blue Label’s total parent guarantee obligations of $3.25 million payable to RBL Bank Limited on behalf of Oxigen Services India as well as $5.375 million as a part payment by The Prepaid Company to SPV2 against its remaining liquidity support obligations of $10 million,” the company said.

The value of the net assets comprising the equity accounted investment in Blue Label Mexico as at 31 May 2020, being the date of its most recent audited annual financial statements, amounted to R138 million.

The equity accounted loss after tax attributable to the investment in Blue Label Mexico for the year ended 31 May 2020, amounted to R5.8 million, based on the audited annual financial statements of Blue Label for the year ending 31 May 2020, which were prepared in terms of IFRS, it said.

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Blue Label to sell its Mexico business