HARARE – Zimbabwe’s largest mobile network operator, Econet Wireless (Econet), recorded an 11 percent increase in revenue to $377 million in the half year to August 2013, spurred by non-traditional innovative products.
The group said traditional voice revenues were maturing and the introduction of a mobile-based money transfer system, EcoCash, and data services on the market “helped register significant revenue growth.”
“We are very excited by the 61 percent growth on data revenues and the more than 550 percent increase of EcoCash revenues which have been underpinned by a strong development of our financial services through EcoCash and Steward Bank and also the level of capitalisation that we put into the business,” said Roy Chimanikire, Econet’s deputy financial director.
The introduction of EcoCashSave — an interest bearing mobile savings account riding on the back of mobile money transfer service EcoCash — has propelled the group’s banking arm Steward Bank operations with over half a million of mobile money account holders, making it the largest bank in the country by number of accounts.
“In the past voice (calls) was the biggest contributor of revenue but right now we see data and EcoCash fast approaching levels whereby their contribution is increasing.
“In fact, we have seen that the contribution as a proportion of total revenues growing from five to 10 percent in the non-traditional revenue streams that we were used to,” he said.
In the period under review, EcoCash processed almost $1,2 billion worth of transactions while its subscribers increased by 76 percent to close at 3 million.
“The growth in the volume of transactions was anchored by the exponential growth of agency network, which grew by 338 percent to close at over 7 000 agents,” Chimanikire said.
Econet’s chief executive Douglas Mboweni said although EcoCash was still not that much profitable due to high investment costs, he however predicted that it will eventually account for at least 10 percent of revenue of the group within 18 months.
In the half year to August Econet sustained its strong market position with the company’s customer base growing to 8,5 million.
Earnings before interest, taxation, depreciation and amortisation (Ebtida) margin decreased to 44 percent compared to 45 percent for the previous half year period.
Depreciation and amortisation increased by 41 percent to $45,7 million in line with the growth of the group’s asset base, demonstrating continued commitment to the future.
Finance charges also increased by 75 percent to $18,2 million from $10,3 million incurred in previous half year period mainly due to a loan facility of $307 million by multi-lender credit facilities.
Chimanikire pointed out that the increase in finance costs was justifiable in light of the good return on investment adding that they were working towards reducing the debt currently standing at above $200 million.
Profit after tax went down to $70,5 million compared to $78 million registered in same comparable period last year while total comprehensive income for the half year also went down to $70,4 million from $76,9 million in same period prior year.
In the period under review the group managed to renew its 20-year operating licence, for which it paid the full amount of $137,5 million.
Due to the large amount paid out on the licence fees, as well as commitments on paying down its debt, the group’s board resolved not to pay a dividend to its shareholders.