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Blue Label ‘disempowers’ black SMMEs

IOL - COMPANIES / 16 JULY 2019 - 06:30 / DINEO FAKU

JOHANNESBURG - The Competition Commission is investigating Blue Label Telecoms for prepaid airtime arrangements that are allegedly disempowering to blackowned small, medium and micro enterprises (SMMEs).

The commission’s spokesperson, Sipho Ngwema, yesterday confirmed the antitrust body was investigating a complaint against Blue Label, saying it was difficult to comment, because they were still gathering facts.

BLUE LABEL telecoms head offices in Sandton, Johannesburg. Its shares were battered on the JSE yesterday, losing almost 10 percent. Simphiwe Mbokazi African News Agency (ANA)

“The nature of the complaint is about the agreement that the mobile network operators have with Blue Label as a distributor of airtime. Apparently, small operators are struggling to enter this market,” said Ngwema.

“We have not concluded the matter; therefore there are no findings yet.” But a copy of the complaint seen by Business Report has blamed Blue Label for dominance and monopolistic practices, citing that mobile network and retailer volume deals with Blue Label disempowered black-owned SMMEs, lacked accountability and excluded black-owned entities from owning wealth-generating segments of the airtime value chain. “One hundred percent of b lackowned enterprises struggle to access point of sale related to technological infrastructure,” said the document.

Blue Label has signed with mobile operators Vodacom, MTN and companies including Steinhoff and Pick n Pay at the expense of black SMMEs. Historical arrangements have allowed Blue Label to sell prepaid airtime at below normal prices from operators directly, said the document.

“This uncompetitive practice means SMMEs would never be able to compete with Blue Label,” the letter said. “The monopolies also have direct and indirect control (over what) government and state-owned enterprises spend, as SMMEs are unable to provide similar discounts even when dealing with mobile operators during tenders.”

The commission was expected to complete the investigation in January after extending the deadline by six months. Blue Label, the owner of Cell C, is South Africa’s largest supplier of prepaid airtime. It supplies voucher or PIN-based airtime and PIN-less or direct top-up airtime. Blue Label’s shares have fallen more than 70 percent as liquidity problems have weighed heavily on Cell C. Blue Label acquired 45 percent of Cell C in 2017 following an R5.5 billion recapitalisation programme. Blue Label spokesperson Nicola White said the complaint against the company was lodged in March 2018. White said the commission was obliged by law to investigate the complaint regardless of its merits.

She said the allegations were without merit and factually incorrect. “That is why the commission has not made any adverse finding,” White said. “No operator is prevented from entering into the airtime market, and Blue Label certainly is not dominant and has no influence over the terms which any operator may negotiate with any upstream or downstream supplier.” White said Blue Label’s over-arching philosophy was to drive financial inclusion for the mass market. “We are specifically focusing on expanding our footprint into informal markets, where we assist our merchants to grow their own business through the provision of technology, products, and services that drive foot traffic into their stores,” she said.



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