Blu Label’s R46-billion electricity squeeze
R46.2-billion of prepaid electricity moved through the group in the year to May, up 4%. The commission it earned fell 13%.
Blu Label, a South African digital distribution group, is expanding its operations into the electricity sector. The company, which previously focused on airtime, vouchers, and payments, has shifted its attention to becoming a middleman in the electricity value chain. Blu Label's energy arm, Blu Energy, is targeting various aspects of the electricity market, including trading, wheeling, renewable generation, battery storage, and municipal billing.
The company recently received a multi-year electricity trading licence from South Africa's National Energy Regulator, granting it the authority to trade electricity for up to 400MW of potential capacity, with plans to deploy up to 180MW in the near term. Blu Label, which is Cell C's largest shareholder with a 49.53% stake, sees an opportunity to leverage its existing infrastructure investments, such as vending and municipal billing, to enter the electricity market.
The move follows the recent separation of Cell C from Blu Label, which has simplified the company's balance sheet and created a major accounting hit. However, the restructuring has also highlighted the potential for Blu Label to monetize its existing infrastructure and data capabilities through new revenue streams in the electricity sector.
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