Econet retrenches 100 employees as operational & regulatory challenges take their toll

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The rough spell being experienced by local telecoms companies hasn’t shown any signs of letting up, with the market leader, Econet Wireless, experiencing its fair set of challenges just like every other operator.

In a statement released by Econet, the company has announced that it has issued retrenchment notices to 100 employees, with a need to adjust to the decline in revenue referenced as the reason behind this move.

Douglas Mboweni, Econet’s CEO, pointed out that the company’s depressed revenues had been created by a POTRAZ regulatory directive, which Econet is still contesting in court.

This is a reference to the telecoms industry regulator’s instruction passed last year to all telecoms operators to reduce their voice tariffs by 35%. The directive came into effect on the 1st of January this year and according to Econet Wireless’ annual financial report it contributed significantly to its lukewarm results which were highlighted by a 41% drop in profit.

Econet has previously spoken out against POTRAZ for moves such as the tariff adjustment, going so far as to accuse the regulator of destabilising the telecoms industry.

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Other challenges plaguing Econet that POTRAZ has influence over include the failure to enforce the payment of interconnection fees which have prejudiced Econet of $26 million from the other operators.

According to Econet, in retrenching these 100 employees the company has fully complied with labour laws regarding this approach.

In related cases of local corporate staff adjustment, the compliance with labour laws was made easier for Zimbabwean employers this year following a Supreme Court ruling in July which allowed for the termination of employment contracts on three months notice.

A large number of local companies took advantage of this Supreme Court ruling to streamline human resources costs, including other telecoms operators like Telecel. Econet, however, claimed that its own spate of job dismissals at the time were not part of a cost-cutting strategy.

At the time, Econet had terminated the employment contracts of 47 people and as part of a cost rationalising effort, its subsidiary, Steward Bank terminated contracts of 39 employees this year. This brings it to a total of 147 jobs shed by Econet, plus an additional 39 for Seward Bank.

Econet has stated that it will award shares to staff who accept the retrenchment offer. According to Mboweni,

The shares are not part of the retrenchment package but are an incentive for a speedy closure of the retrenchment process that will reward long service with the company. This award will only be available to those employees who have been identified for retrenchment, who voluntarily agree to abide by the process and timeframes outlined in the retrenchment process. The award of shares will be done after the retrenchment process is completed.

The retrenchments become the latest in a series of measures being taken by Econet to maintain operational efficiency and adapt to the tough environment. So far the mobile operator has asked its suppliers to reduce their prices by 15% and it has reduced staff salaries by 20%.

For Econet, which has proudly highlighted its impact in local job creation referencing 60,000 jobs created by the operator and all its subsidiaries, actions like retrenchments and employment contract terminations are a hard pill to swallow.



32 Comments

  1. Anonymous says:

    The economic situation here in Zimbabwe is extremely challenging. While it is always difficult for companies to let people go, they do so in the interest of their own survival. I admire Econet for their courage to take the difficult but necessary decisions in under these tough operating conditions. Here’s hoping that this round of retrenchments will be the last and that the economic situation will improve soon!

    1. paul.M says:

      You’re probably right on this one. If companies in Zimbabwe are to survive this economic storm, tough decisions must be made. It’s certainly sad things have come to this, but no one can blame Econet for such a move. I continue praying that the economy improves sooner rather than later!

    2. [email protected] says:

      Are you sure you know what courage is?

      It can be done without courage. Nothing really out of this world or exceptional about it.

      EVERY company serves its interest as a first priority.

      EVERY company in Zim is retrenching. Are they courageous?

      1. Direct Musvovi says:

        the first people to be given the retrenchment notice are the ministers and their leader for this economy to be cured. they are clueless on strategies to turn the nation back to its fortunes

  2. Simon says:

    Econet now hijacked and operated by Gay Gangsters. Econet now need to clipped wings by the government otherwise Econet will induce civil unrests should other companies follow suit.

    1. terry_zim says:

      Gay Gangsters? What you on about? Econet have to take such action because the economy is in such a mess! Other companies will inevitably follow suit unless we see a dramatic improvement in prevailing operating environment. Doesn’t take a genius to see we’re in a tunnel without many signs of light at the end.

    2. malvern84 says:

      Portraz now hijacked and operated by Gay Gangsters. Portraz now need to clipped wings by the government otherwise Portraz will induce civil unrests should other companies have to retrench employees due to ineffective regulations that prevent businesses from operating effectively. Everyone, not just Econet staff, will suffer from this!

    3. [email protected] says:

      What are you smoking?

    4. purple says:

      Does one have to be Gay to be a Gangster or be Gangster to be Gay?

      1. TheKing says:

        Hahaha

  3. Rr says:

    Yaaah nt convinved abt the whole potraz issue lowered prices are inevitable even in developed economies how does unlimited calls and texts for 20/a month and 1gb data sound.
    The interconnection issue on the other hand is potraz fault.
    Econet shld stop crying wolf when have they ever agreed to reduction in costs. Left to them we would still be paying 15c a msg 25c a call and $1/gb

    1. cool says:

      Richard is ryt, bt unfortunately the problem is our government , thy wanna ride on econet’s back. Our government has a history of bad negotiation so m nt surprised about why Econet is unwilling to share their tools with them in order to reduce operating costs. the deal btwn liquid and airtel z a gud evidence, Minister Mandiwanzira must swallow his supremo ego and act like a gentleman for the sake of the future

  4. Richard says:

    The tariff reductions are justified in the wake of consumer spending power being diminished. I dont understand why Econet is still contesting the tariff cuts. They want to extort money from consumers. I know Econet is bitter coz they took hefty loans for expansion and now because profits fell by 41% its provin hard to settle the debt. It now goes back to what Potraz was saying that the only effective cost cutting measure that can reduce costs by up to 40% is infrastructure sharing. Its 1300 sites are on generators at a give time and the fuel budget is costing millions of dollars. Why cant they share those costs with other operators and save employees the retrenchments. Why cant they share site leasing costs and cut out costs. 6.2 million litres annually of diesel to power base stations is not a joke and i am sure they will retrench more workers in the long run.

    1. Tapiwa says:

      @ Richard have u ever complained about the prices that we are charged for goods and services. Medical costs are on the rise, Fuel cost is still high, Education fees are on the rise and all pple attack is the telecoms industry. We all know that companies like Econet have helped save Zim drifting back 20 years in tech field. The plating field is not even they are made to pay licence fees others are not paying. They are paying VAT for revenue collected on their behalf by NetOne and TelOne yet these companies are not even paying back debts. How does a company become operational???

      1. [email protected] says:

        You are deluded. You seem to be convinced that Econet is some saviour for Zimbabwe, and therefore requires some special form of treatment and unending gratitude.

        Customers made Econet.

        Is Econet thanking them? How? Desiring higher billing rates? Destroying the ecommerce ecosystem by zero-rating their own product? Maximising every new “innovation” by over-billing?

        Fact is, Econet is no saint. So go tell your boss in the Econet marketing or publicity department to find better words to use to get people to worship Econet like you do

        1. Ini says:

          [email protected] you need help. In a whole ailing economy how can voice calling tariffs go down when all else remains high? Why force match our tariffs to other countries whose operating costs and environment are not the same? The tariff issue is the further decline to 12c and 9c as proposed by Potraz, but on the background of what? License fee remains the same, add tax and more tax then increase duty. Dude quit smoking.

    2. Jono says:

      Infrastructure sharing is the way to go and good for our strained economy.

      1. Kenny says:

        infrastructure sharing on an equitable basis, what are the other players bring to the table. They did not invest in equipment thinking they will eventually ride on the back of others investments. It costs money to build, so it should costs money to share. They should pay up if they want to benefit.

  5. Tash says:

    Guys we need to be realistic, how can you share infrastructure with companies ha are not even able to pay for the interconnection fee. don’t just judge things in a myopic way. Econet invested a lot of money i infrastructure development and this companies are busy with promotions and they have invested their money in other things where there is no sharing and one operator will lose and you think that is fair no. Until POTRAZ creates a level playing field everything will start to go back to normal.

  6. macd chip says:

    Sable chemicals is also closing with 500 pple losing their jobs, can infrastructure sharing save it?

    Before we start talking about infrastructure sharing rubbish, can all the telco companies companies pay up!

    What happens when they fail to play their part?

    It is this gvt mentality of grabing evrything for free which is now the hallmark of every minister without regard to the results of their actions. Their words becomes law.

    They can successfully push for the crap sharing and feel good about it, but in the same breath killing their own children.

  7. Anonymous says:

    economy my foot,masiyiwa is climbing up e billionaires ladder wth e same money frm e depresed economy,he could easily pay those 100 workers for years n it wont leave a dent in his pocket…ths has nun 2 do with keeping the company going,it has evrythn to do with the big fish at econet keeping their pockets fat n growing fatter.n e ordinary employee has 2 suffer e blow.

    1. Ini says:

      Econet Zimbabwe is the only listed company run by Strive. I hope you understand what that means.

  8. dstv says:

    to share infrastructure the gvt shld just give the framework and regulations but leave the independent networks and isps to do their own negotiations.

  9. Richard says:

    An example of infrastructure sharing is decommissioning of towers put at the same mountain or site and sharing one tower while the other two towers are deployed elsewhere where the operators can also share. Sharing of generators and power systems is also feasible. Where three operators used to send three trucks with diesel they can send one truck. Surely how justified is an $18 million diesel budget annually for Econet over 140 sacked employees .I agree the players need to negotiate without interference but this is the way to go. Our environment is different from South africa where operators do not have much fuel costs and power problems. Econet unlike Sable chemicals has options to cut costs but ego and pride is letting them down. They will rather sack employees or threaten suppliers to cut costs or worse fight for a tariff increase. They need to wake up. This sharing will be done on an legally enforceable agreement with rules for termination should another party breach the contract. I dont see wht is wrong with that and its not riding on someone’s back.

    1. macd chip says:

      Since when did anybody in Zim with deep pockets ever respect rule of law starting with gvt ministers??

    2. macd chip says:

      You can only enforce rules and law in a country where no one is above law and when everyone fear and respect law. You do not get that in Zim especially these so called ministers, honourables and politically connected.

  10. Richard says:

    If Zimbabwe was such a banana republic so much so that there was complete lawlessness as you claim , i dont think Econet would be operating right now. I also dont think Econet would have been given the go ahead to test and commission broadband in Zim. If there was so much lawlessness here i dont think operators would have been given the platform to make some input and come up with a draft policy like what has happened. Simply put it the whole thing would have been shoved down their throat. The same Econet thatsome people here blatantly worship is contesting a tariff cut and is agitating for a tariff increase so that they make those hefty profits they were used to when the dollar was introduced. They were so much obsessed with overpricing to the extent that it took telecel to make the price of a sim card go down from $30 to $1. When they introduced broadband it was pegged at a fixed figure of $25 and it took Telecel again to reduce it. They claimed 3G when it was mostly gprs and edge, misleading people only to suspend data services and rush to expand the system when it was congested. The same econet launched ecolife and fleeced subscribers of their cash when they terminated the service. The same econet has billing issues wherby subscribers airtime mysteriously disappear. Again econet had problems of undelivered texts and up to now bombards customers with spam messages. Now you tell me who does not respect the rule of law. One does not need to scratch his head for an answer. Econet is the chief culprit that does not respect the rule of law. Its complete rubbish to think that firing 100 employees is a cost cutting measure that beats infrastructure sharing. Problem is they are others who behave like econet lap babies and any perceived attack on Econet is treated with a tongue lashing even when it makes common and logical sense. To such people Econet is the alpha and omega of telecommunications in zim. Econet should not hide from the process which they took part and deliberated on up to the extent of crafting a draft. The hypocritical nature of Econet is there for all to see and whether we rant or bark infrastructure sharing is gonna happen come November whether they like it or not. It is now policy and it definitely aint gonna change.

  11. Ini says:

    Lord have mercy on us Zimbabweans. A bottle of cooking oil costs R5 in SA, and R15 in Zim, obviously due to different cost structures in the two economies; government steps in and commandeer the reduction in cooking oil prices to match global standards of around R5. Cost structure remaining the same. How do we reduce the cost structure? Well make them share infrastructure.
    The story of Zimbabwe in brief.
    Tariffs are going to reduce 12c in December and 9c in 2016, forget about ZESA tariffs going down, license fees and taxes going down, land rentals and all other costs going down, the tariff should go down. But why one industry the country? Telecommunications for that matter, not energy, fuel, food, medical, education, housing, clothing or transport. The only one that had been doing better in such weather, talk of killing the goose that was laying golden eggs.
    Misplaced priorities and misdirected anger from a nation of educated fools. I thought the government was the one to blame but after reading of these comments here, the government and its people are the same. Lord have mercy on us.

  12. Richard says:

    Potraz carried out a research together with all the operators more than a year back and then came with those cost structures. It wasnt forced on them!

  13. Optimus Prime says:

    A cursory glance at Econet financials however shows where the costs are. It’s not staff costs. 70% plus is going to Liquid. Econet overpays for broadband. A case of Masiyiwa paying himself at the expense of the company and, now, at the expense of staff.

  14. Rr says:

    Econet also has a problem of financing companys which dnt necc make progits ecolife ecofarmer stewart bank whicj is all good bt at the end of the daythese are all writedowns to cover losses.

  15. Sagitarr says:

    Our troubles in Zim can easily be analysed. We have a govt. made up of individuals nominated by the prez. Their allegiance is to the prez, NOT voters. What they think, say or do is tied to this belief. We have some companies, like EW which have done very well but seem to be directionless currently. Again, there could be EW allegiance issues at play here, I don’t know. Most govt. policies sound right but implementation is very poor, due to allegiance issues (Generals masquerading as CEOs etc) among other issues. The judicial system has fallen prey to allegiance issues as well although on the face of it, all seems well (the judges now have 3 cars each, at independence they had 1 each). The laws handed out by courts are implemented if they favour the “allegiance” (which is wrong) and this obviously scares away investors in the long term. Ultimately the tax-payers/investors are shafted all over by a non-performing system which is subliminally made to look as if it is geared towards progress but in effect taking the country back until the malaise is so gross and shocking like 18 hr-long black outs. At which point the stupidity of officials we assume to be intelligent really shines, once they open their mouths. It’s an endless cabaret which will make you laugh when you want to cry. That professional lawyers, engineers, doctors et al throw away their professionalism for a car or LED TV really boggles the mind. In a functional economy anybody that goes to work can buy themselves these trinkets.

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