Massive profit jump for Zim’s Econet after operations squeeze

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JOHANNESBURG – Increased focus on minimising costs and optimising income generation has propelled Econet Wireless, a Zimbabwean telecom group, to a massive revenue and profit jump, with financial technology, data, mobile money and value added services contributing more than voice.

Econet now has 11.4million mobile network subscribers, 8million mobile money users and 600000 digital banking depositors on its Steward Bank unit.

It paid about $60million (R755.7m) against around $23m in taxation to the government.

Econet’s profit for the year to end February 2018 surged from $36.2m to $132.3m, it said yesterday.

Revenue strengthened from $621.7m to $831.6m in an environment where disposable incomes are under pressure owing to a flat-lining economy.

“The customer only has a dollar to spend and what is your share of the dollar,” said Roy Chimanikire, the chief finance officer at Econet.

Econet cut costs by reducing the salaries of workers by 20percent. There have also been reports that the company cut payments to suppliers by 20percent.

The company has since declared a 5.8cents dividend for the period under review compared to 2.6c in 2017.

This has amounted to a comprehensive dividend amount of $60m for the period.

Capital expenditure for the period was also higher at $102.7m against $33m in the year earlier contrasting period.

The company had to carry out an offshore rights issue in 2017, but failed to execute its debentures on a foreign exchange owing to regulatory bottlenecks.

“While the board had expected to list debentures issued by the company shortly after the rights offer on a foreign securities exchange, the relevant regulatory authorities did not approve the company’s request for a sinking fund account, which would have been used to repay the debentures into an external foreign currency denominated account,” said James Myers, the chairperson of Econet.

Econet has also ventured into media through its Kwese TV pay television platform that has taken competition direct to MultiChoice Zimbabwe’s door.

Elitist service

Douglas Mboweni, the chief executive of Econet, said Kwese TV was reconstituting the view of satellite television as an elitist service.

Kwese obtained Zimbabwe licensing this year after a lengthy battle with authorities, despite having rolled out its services elsewhere across the continent.

Econet has faced other regulatory issues, with the government pushing for infrastructure sharing.