Econet records ZW$7.9bn profit, set to roll out 5G

Zimbabwe Stock Exchange-listed mobile network operator Econet Wireless reported a strong performance for the half year to August 31, 2021, with a ZW$7.9 billion profit in historical terms, up from a loss of ZW$4 billion registered in the same period last year.

Econet chairman James Myers said the stellar performance was due to a rise in revenues which nearly doubled, a massive reduction in exchange rate losses and increased cost management initiatives by the company.

“In the period under review, revenue increased by 95% to ZW$29.6 billion, in inflation adjusted terms, anchored by the increased contribution of data services. Data revenue grew by 136% and our voice services revenue increased by 92%,” he said, while presenting the group’s financial results.

“Aggressive cost management resulted in earnings before interest, taxation, depreciation and amortization (Ebitda) margin improving to 55% from 47% in the comparative period,” he added.

The country’s largest mobile network service provider’s exchange losses, arising from foreign currency denominated obligations, decreased from ZW$15.2 billion to ZW$481 million in the half year period.

These losses arise because of the movements in the exchange rate on the foreign currency auction system and the consequent impact on the value of foreign currency liabilities, as expressed in the reporting currency.

In inflation adjusted terms, Econet recorded a ZW$6.6 billion profit after tax, up from a loss of ZW$127.6 million recorded in the half year to August 2020, while revenues in historical terms, surged from ZW$6.7 billion to ZW$27 billion.

Spurred by this strong performance, Econet is now set to become the first telecommunication company to roll out 5G network in Zimbabwe in the coming few months in response to rising demand for mobile broadband services.

“During the period under review, we upgraded our 4G network in Harare and Chitungwiza and this increased the data browsing speeds 1.5 times. This reflects our commitment to improve customer experience.

(A total of) 18 new base station sites were commissioned across the country to provide network connectivity in new suburbs that were previously unserviced. We plan to commission over 215 new LTE sites country-wide to improve network quality and availability,” said Myers.

“In the next few months, we will start our 5G journey as we pivot to the next stage of our digital evolution.”

5G is fifth-generation mobile network technology which offers significantly faster data speeds and lower latency or response time. It allows several devices to be connected at the same time and will in future help enable seamless communication and interconnectivity between smart devices, a
process commonly called the internet of things (IoT). Meanwhile, Myers said the group’s capital investments remained severely constrained at 3% of
revenue against an industry benchmark of between 10% and 15% of revenue, on account of foreign currency unavailability.

“Our infrastructure requires continuous improvement in order to continue to provide a service at the quality and scale demanded by our customers. This has not been possible in the current environment, due to the unavailability of foreign currency,” he said.
In the half year period, increased load shedding strained Econet’s service delivery and increased the group’s operational costs.

Myers said the listed telco will continue to upgrade its base stations to alternative power options, notably solar and diesel generators, within the constraints of foreign currency availability. “The cost and availability of fuel (presents) an additional challenge where our backup power is reliant on generators. These alternate power options are intended to ensure a more reliable source of power. We are deliberately moving to solar power in order to minimise our carbon footprint in line with our sustainability objectives,” he added.

The company declared an interim dividend of ZW$0.60 per share for the half year ended August 31, 2021.