South African mobile wallet specialist company Blue Wallet is confident of its future in India despite incurring a loss of more than 26 million rand in the past fiscal year.
The company remains optimistic because in the same financial year, it had increased its customer base by 5.4 million to 22.6 million.
Blue Label is pinning its hopes on growth in the largely untapped Indian market of people without bank accounts.
Joint CEO of Blue Label, Mark Levy, said he was confident the company would be able to achieve scale through partnerships with organisations like the National Payments Corporation of India.
Levy told the weekly ‘Sunday Times’ that Blue Label would undertake further investment in its Indian operations.
“We’re diversifying our product range. In order to do that, we have to put a lot of money into marketing and developing the market,” Levy said.
“We want a bigger share of that mobile wallet space and we have to spend on it to achieve that scale,” Levy added, while conceding that Blue Label would not be the biggest player in that market.
“We don’t have a clear picture of when we’ll break even (in India) but if you look at the volumes and the need, we’re confident that we’ll be able to see some significant growth in that business.”
Market analysts here appeared to support Blue Label’s plans for India, justifying the current losses.
Peter Tkaendesa, an analyst at Mergence Investment Markets, said the potential for growth in wallets to over 22 million was encouraging and could provide the economies of scale required for profitability in the longer term.
“It will take time to build scale and monetise the subscriber base, therefore in the short to medium term the returns are unlikely to be great,” Matthew Zunckel, an investment analyst at Mvunonala Asset Management told the weekly.