Econet results reflect tough environment

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© MOBILE network giant Econet Wireless Zimbabwe has posted results that reflect the impact of hyperinflation on entities operating in the country.  For the half year ended August 31, 2019, reve- nue increased by 45 percent in its inflation adjusted figures to $1,25 billion.

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However, the company grew its market share voice and data traffic in the period under review which demonstrated strong operating strategies, despite the challenging environment.

The company said the inflation adjusted figures have been indexed for comparative purposes by ap- plying, to the prior year historic cost numbers, the inflation indices prevailing at the time. Companies have adopted accounting standards for entities that operate in hyperinflationary conditions.

“Hyperinflation has affected our customers nega- tively as consumer purchasing power has declined and consequently affected the viability of most businesses in Zimbabwe,” the company noted.

In historical terms, revenue grew by 138 percent to $836,4 million from $351,3 million in the prior year.

EBITDA margins were at 42 percent after man- agement implemented “appropriate cost efficiency strategies in light of the deteriorating economic environment”.

Overall, EBITDA grew by 90 percent to $522,7 million in inflation adjusted terms and by 223 per- cent to $360,8 million in historical terms.

This performance was on the back of robust business strategies which saw subscribers grow by 10 percent to 12,6 million. Customer market share for the six months also grew to 69 percent from 66 percent.

The company attributed its strong market posi- tion to its “understanding of customer needs and continued provision of telecommunications services at a quality level that is unmatched by the competition”.

“Not only has the company continued to grow its market share, its volume growth in terms of min- utes of use and data bytes delivered has remained resilient showing that there is still strong demand in the market for our products and services,” said company chairperson James Myers in a statement accompanying the results.

Econet also consolidated its position in the mar- ket with its market share for voice traffic growing to 79 percent, from 72 percent prior year comparative.

There was also significant growth in data traffic market share to 73 percent from 69 percent for the same period last year. The company, however, in- curred exchange losses of up to $1,9 billion for the six months under review.

“The group’s results for the period under review were significantly weighed down by the accelerated depreciation of the local currency,” Econet said.

“As a result of outstanding foreign currency obligations, the group recorded foreign exchange losses of $1,9 billion.”

The company said the resultant exchange losses have negatively impacted the performance of the company which had resulted in its first loss since 2010.

The company and other operators continue to implore the government to consider the impact of these “debilitating challenges on the viability of the sector”.

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