Econet Profits Sink: “Diesel generators chewing revenue!”

ECONET Wireless Zimbabwe’s after-tax profits declined by 15,5 percent for the year to February 28 2013 weighed down by a significant increase in depreciation and amortisation, chief executive Mr Douglas Mboweni has said.

Douglas Mboweni revealed that 75% of the base stations are running on diesel generators chewing significantly in their income among other chief operational costs.

Although their financial results did not present a loss, it merely produced a serious decline in profits.

The firm’s full year earnings took a knock declining from US$165,7 million to US$139,9 million after depreciation and amortisation went up from US$46,4 million to US$71,5 million during the year.

“If you noticed, we have deployed a lot of equipment into the business for the last five years, so things like depreciation and amortisation begin to hit your accounts,” the Econet Wireless boss said.

But Mr Mboweni said Econet had reached a stage where it would gradually scale down on its investment in infrastructure. Investment in this regard declined to US$147 million this year from US$216 million outlay into infrastructure last year.

The firm suffered a decline in profitability despite revenue increasing significantly from US$611 million to US$694,8 million in 2012.

Earnings before interest tax depreciation and amortisation increased by 5 percent to US$305,3 million in line with growth in assets.

Econet Wireless Press Briefing

Econet Wireless Press Briefing

The company said the value of assets had gone past US$1 billion, a 25 percent growth on prior year, making the mobile phone operator one of the biggest investors in the economy since its inception in 1998.

Econet said its mobile phone-based money transfer business EcoCash subscriber numbers had registered 62 percent growth to 2,1 million while agents saw a 242 percent growth to 3 000 countrywide.

Mr Mboweni said after increasing its equity in TN Bank to 98 percent the investment was expected to underpin EcoCash’s growth.

“The company acquired TN Bank as it realises the strategic role financial services will play in future growth. Mobile money services in Zimbabwe require a banking licence and this investment allows the company to be firmly in control of the future growth of its financial services related innovations,” Econet said in its financial statement.

The country’s largest mobile phone operator said internet broadband service continued to register massive growth due to its high speed, excellent quality and wide coverage of Zimbabwe.

Econet said subscribers to its data services had increased by 52 percent to 3,1 million during the 12 months period under review.

The company has reason to be optimistic about the future after successfully renewing its mobile operator’s licence, which is now for a 20-year tenure following the expiry of its 15-year licence.

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