Econet just sent out a press release today to basically say they’d like to go back to their founding roots when the majority of the company’s shares where in the hands of ordinary people, and that to do that they will be splitting the company’s shares 10 to 1.
The split was announced at the beginning of the month. Each existing ordinary share will be split into 10 ordinary shares, making it easier for ordinary Zimbabweans to access them.
The share split announcement comes along with two related developments; the loan offer to the Zimbabwe Stock Exchange (ZSE) for the setting up of an automated trading system and, the announcement in January that soon people would be able to buy stocks on the ZSE using the Econet mobile money transfer service EcoCash.
Here’s the full release:
In a major development since its listing in 1998, Econet shareholders will on Thursday vote for a share split that will enable more small investors to buy shares in Zimbabwe’s largest telecommunications company.
This will be possible after shareholders approve a “ten to one” share split at an Extraordinary General Meeting (EGM) which Econet says has all the signs it will be a success.
Econet says while the share split will not have any impact on the company’s market capitalisation, it will allow investors to trade each split share at a tenth of the current market price of the company’s shares.
This means there will be more active trading in the Econet shares as more people will now be able to afford to invest in the shares.
At listing in 1998, small investors were the majority of shareholders in Econet. However, as the price has risen due to the company’s growth, small shareholders have gradually been squeezed out by large foreign investors and fund managers.
The Econet founder, Mr Strive Masiyiwa, has not been happy with this development and he has personally pushed for the share split.
Econet believes that the share split will not only allow more small investors to buy or increase the number of Econet shares they own, but will also make shareholders in a fast growing company and in which they will over time benefit from the growth in shares,” says the company.
“The public shareholders of the company are numerous, with many ordinary shareholders seeking to buy shares in the company. This share split will open up investment in Econet to more ordinary investors who had been unable to take part due to the high prices,” says Econet.
The share split comes after the Econet board realised following a study that the company’s shares were now so expensive that only foreign investors were buying the company shares. As a result, the level of foreign ownership in the company has shot up from a mere 10% at listing in 1998 to more than 30% today.
As at Tuesday, February 26, the price of one Econet share was $6.90, which means an ordinary member of the public would have to pay $690 to buy just the minimum lot amount of 100 ordinary shares. But after the split, 100 shares will cost less than $68.
Econet says the share split is an important development for small investors who have always wanted to participate in the growth of the company. Millions of small investors had bought the company’s shares when it listed but have been unable to buy more shares particularly after dollarization as the shares became expensive.
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4 comments
in a way econet has a hidden agenda by giving a “soft” loan to zse. they will benefit from zse by turning it into an ecocash zone. now this explains their no “strings attached” policy. in short its an attempt to steer the zse especially as ecocash begins to control everything. God help, we need regulators to look closely at these deals. we do not want all the economic power to reside in one firm
Let them grow and touch every corner of the country, every life style then introduce regulation to split it. It has been done before in other countries without affecting ordinary people, actually benefiting them. Took the example of AT&T, BT etc.
Let econet be the vehicle for growth and new innovative ideas, then chop them to size at a later stage.
I agree. Banks cry foul now yet the last donkey years we have been subjected to long queues and shoddy banking service. I think it’s high time innovation mapped the wy forward. Anything easier to make our lives more comfortable the better. Why should we, in this day and age, still march to banks to do business? Here I set foot in an FNB branch almost 4/5 times last year. High time the mindset in Zimbabwe changes. Banks, ZSE, paying for goods at retail outlets.
Well done ECONET for pioneering the participation of the average investor in a stable enterprise. Given the scope of growth and diversity of support your company and associated organisations provide to the Zimbabwean citizenry. we should be proud of these efforts and activities and their benefits. Please keep dreaming, doing and leading the transformation of business in our country.
Tinotenda, Siyabonga, Thank you………….!