The two brothers who revolutionised prepaid airtime in South Africa

Mark and Brett Levy went from humble beginnings in Delmas, Mpumalanga, to running a prepaid giant in South Africa.

The Levy brothers grew up in Delmas and, after their father’s death at a young age, became more independent.

During their high school years, the brothers started selling electronic products, including car radios and televisions.

By the 1990s, the two brothers had built a strong electronics distribution business, where they used parallel imports to gain a pricing advantage in the South African market.

This would lay the foundation for Blue Label Telecoms, which the brothers used to establish a national distribution network for virtual stock management.

After winning a Telkom tender for the provision of prepaid phones throughout South Africa, the Levy brothers ventured into the telecommunications sector.

Prepaid airtime at the time was only bought and sold via physical cards, with the brothers looking at a way to digitise this business.

They then created an electronic top-up pin system, which was rapidly adopted due to its convenience for consumers.

This new system was not without challenges, as mobile operators could not supply them with electronic PINs, meaning they would have to buy prepaid scratch cards to get PINs.

PINs started to grow in popularity after these challenges were addressed, and the group’s prepaid airtime point-of-sale devices were sent to numerous merchants across the country.

With the prepaid platform soon having a national presence, the brothers expanded into new industries and started offering electricity and water vouchers, prepaid data, ticketing, and more.

This strategy was incredibly successful, and the group’s transaction volumes grew to over 5 billion per year.

The group was listed on the JSE in 2007 amidst strong growth. Close to a decade later, its market cap was close to R20 billion, and the stock was often seen as a JSE darling.

Blue Label Telecoms was initially known as the “The Prepaid Company,” which remains a subsidiary of the company.

The early days of the group were characterised by 18-hour work days. The brothers then started a tradition where they would open Johnnie Walker Blue Label bottle after major deals.

The brothers would write down the details of the deal on the bottle—and this is where the company’s name originated. They did this during the JSE listing as well.

Not all sunshine

However, the group would soon be in a heap of trouble after it acquired a 45% stake in Cell C for R5.5 billion in August 2017.

Cell C was struggling before the acquisition, and Blue Label could not turn it around. It would eventually have to write down its investment to nil.

However, Blue Label would not give up on Cell C and launched another massive recapitalisation and turnaround plan.

The slightly confusing recapitalisation saw Blue Label-owned Prepaid Company lend Cell C R1.03 billion to pay off debt claims and purchase R2.4 billion in airtime.

Following the recapitalisation, Blue Label, through The Prepaid Company, increased its economic interest in Cell C from 45% to 63%.

To acquire full control of Cell C, Blue Label transferred its telecommunications licenses to The Prepaid Company. ICASA approved this move in January 2025.

Cell C continues to struggle, but there are signs that the telco is starting to improve.

Blue Label’s interim results for the six months ended 30 November 2024 showed that Cell C was technically insolvent.

This is because Cell C’s liabilities totalled R17.14 billion, while its assets stood at R13.8 billion. The company thus has a negative equity of around R3.3 billion.

A technically insolvent company will not be able to settle all of its liabilities if its assets are liquidated. Companies in this situation need drastic measures to improve their situation.

The group’s technical insolvency is nothing new, but its current position is an improvement from the around R4 billion negative equity position recorded at the end of the 2024 financial year.

Cell C’s latest income statement also showed that the group’s net loss before taxation dropped from R336 million in the prior comparable period to R149 million in the first half of the current financial year.