Econet Not Surprised By The $ 105.2 million Revenue Decline!

Econet Wireless Zimbabwe CEO Mr Douglas Mboweni was not perturbed by the nose dive in revenues which they currently recorded, as they prepare the company for other revenue outside the conventional voice and SMS models. 

Speaking some few hours ago at Miekles hotel during their financial briefing, Econet Wireless Zimbabwe announced probably their biggest revenue slide ever, after a major $392 million rise in the prior year,  as the economy continues to toughen while even government and has not eased the operating environment with cumulative taxes against them. 

 Econet Wireless Zimbabwe’s revenue for the year ended 29 February 29, 2016 slid to $641 million,  a 14, 1 percent down from $746, 2 million in the prior comparable period as voice and SMS revenues continued to underperform.However They Still made a profit of $40million a decline from $70million last year.

 

By Tawanda Musarirwa

The Econet CEO Mr Douglas Mboweni said the company had long anticipated the decline in voice and SMS revenue, and the mobile telecoms operator was basing future revenue growth on existing and anticipated data products.

“The local telecom industry in line with global trends is experiencing a decline in voice revenues. We long saw this trend and over the years we have invested in our infrastructure and created an innovation pipeline to create new reve- nue streams. In a shrinking industry we have maintained market dominance getting 70 percent of the value share while aggressively growing our broadband and mobile finan- cial services. Through our robust business model we are overcoming dis- ruptive technology cycles and strong economic headwinds,”

he said.

He said the declining voice revenues will be eased by incentives and packages that suit declining disposable incomes and growing our broadband through wider 4G/ LTE coverage, offering affordable smartphones and rolling broadband to the home. Econet’s profit-after-tax stood at $40, 2 million impacted by high depreciation amounting to $136, 8 million

Earnings before interest, taxes, depreciation and amor- tisation (EBIDTA) was $238, 4 million down from $285, 6 mil-lion which was 16, 5 percent. Commenting on the financials this afternoon, finance director Mr Roy Chimanikire said:

These results reflect the impact of the regulatory tariff reductions as well as a cock- tail of taxes and levies which include 5 percent excise duty and the increase in Universal Services Fund (USF) levy. This has effectively reduced our tariffs while directly increasing our costs through additional tax burden.
Through an aggressive cost optimi- sation programme we are ensuring that we protect the bottom line.”

During the period under review, Econet recorded sub- scriber growth of 9 percent from 9, 2 million last year to the current 10 million. This growth was in spite of the over 1 million subscribers who were deregistered in compliance with regulatory require- ments for proper registration. Management said revenue lost from the de-registered subscribers amounted to $2 million and the cost to re-con- nect these subscribers came to $500 000.
EcoCash continues to grow Mr Mboweni said EcoCash has become the largest mobile banking and money transfer service in Zimbabwe, and one of the largest in the region. As of year-end, EcoCash had 5, 8 million registered users and had moved 6, 6 billion through money transfer, both within Zimbabwe and from Zimba- bweans remitting money from outside the country.
Other services such as Eco- Sure and EcoFarmer had also registered growth during the period under review. For example, he said EcoSure has covered over 1 million lives during the course of this year while EcoFarmer now had 900 000 clients.

“We see great potential in these two services and we have exciting plans for them in the coming months,”

he said. Going forward, the company said it will continue to invest in infrastructure and has an extensive innovation pipeline as Zimbabwe’s largest telecommunications company continues to diversify revenue streams away from the traditional sources of voice and SMS.

“The company’s resilience through continued investment in infrastructure and intro- duction of innovative products was also key to surviving and growing in what is increasingly becoming a volatile and complex economic environment. We are also focusing on cost optimisation to protect revenues,” said the CEO.

Marvelous Chibagidhi

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