Econet Wireless Zimbabwe full year profits down by 16%

Posted by Read 18 Comments
Econet Wireless Zimbabwe Chief Executive, Douglas Mboweni

Econet Wireless Zimbabwe Chief Executive, Douglas Mboweni

Today, Econet Wireless Zimbabwe, the company that has the lion’s share of the mobile telephony & broadband business in Zimbabwe, announced at a press briefing their annual financial results the period ending February 2013.

The results are not the usual super impressive goodness the company has been posting in recent years. Profits after tax are down 15.6% from $165,741,088 in 2012 to now $139,938,220. Though the total revenues increased, the rate of increase this year, 13.7%, is much lower than the change the company registered from 2011 to 2012, 24%. The cause we noted from the CEOs presentation is that voice revenue is slowing down but costs remain very high. Costs like operating costs (generators, diesel to run them, logistics etc..) and the cost of money borrowed.

Data is however picking up with now, 3.2 million mobile broadband subscriptions. But data doesn’t have the network restriction advantages that allowed voice revenue to flourish in a market where only 3 operators were licensed. Plus, the internet itself actually opens up gates for over the top services like Skype, Viber, WhatsApp and others that are eating ever faster into the traditional revenue streams.

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A copy of the abridged results has been made available on the Econet investor site, and you can also download it here.

Here below are the major points we picked from the results:

The money:

  • Revenue for the period was $694,843,608 up from $611,115,533 in 2012
  • Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was $305,343,981 up from $290,894,326 in 2012.
  • Profit before tax was $204,903,243, down from $239,129,909
  • Profit after tax was $139,938,220 down from $165,741,088

Broadband

  • Data subscribers increased by 52% from 2.1 million to 3.2 million
  • The company is not going to fight services like Skype and Viber, it’s going to configure the business to benefit from them.

EcoCash

  • Subscribers increased by 62% from 1.3 million to 2.1 million
  • The agency network has grown to 3,000
  • EcoCash has processed transactions worth $1.2 billion since launch in September 2011 with 33% of that value in the last 3 months. They have processed about 55 million transactions since launch.
Image credit: Econet Wireless Zimbabwe

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18 Comments

  1. Time says:

    “The company is not going to fight services like Skype and Viber, it’s going to configure the business to benefit from them.”

    I’m guessing that’s Econet code for prepare for data price increases.

    1. Wonder says:

      It means they even thought of fighting Skype, Viber and Whatsapp!!! How? By blocking them?

  2. macdchip says:

    Luckily Telone has already configured its business to benefit from my viber calls…..

  3. voice revenue is slowing down but costs remain very high

    this is the trend that MNOs have to accept and be prepared for. with economies (both local and abroad) tightening up, people find Whatsapp and other IMs a better alternative to voice calls and SMS. so be prepared gentleman, the days of mega millions is over!

    1. MI5 says:

      We should always remember that Econet is empowering under previlegde at home and abroad through education [JNSF] http://www.projecthigherlife.com/new/joshua-nkomo-scholarship-fund/ “Econet Wireless, Econet Services or Econet Group are not as bad as we think”…

      1. tinma@n says:

        What they do as social responsibility does not mean high prices should be acceptable. If that would be your reasoning, then true sacrifice would be keeping prices low, helping those underprivileged AND losing out on profit.
        But that wouldnt be business would it?

        Their social standing means diddly. Just improves sentiment and perception. If anything, it attracts people (like you) who “remember” and feel high costs are acceptable

      2. Teflon says:

        What does this have to do with them charging $90 for 1GB then only dropping the price because when people looked at the competition (e.g telecel $45 for 2G bonus) it could no longer be justified? Econet were quite happy for us to continue paying that high price believe me.

  4. spencer says:

    This was merely due to the large capital outflows in the form of investment in network capacity given the rapid increase in subscriber base as well as investment in Ecocash. From their published financial statements revenues increased but investment also increased hence the decline.

    1. tinma@n says:

      That makes sense. Though, even after having considered that, one cannot ignore the impact of competing voice and message-based services(Whatsapp especially Viber) that run over data services. Without those, the $1 SMS airtime would have scaled up profits significantly.

      So data is progress and foe. The sector will continue to normalise, profits will be affected by app-based services. Thank goodness we have Telecel to compete on data. Otherwise Econet wouldve been milking people dry.

      1. tinma@n says:

        * .. (especially Whatsapp and Viber)…

      2. spencer says:

        U are right, they are losing sms revenue, but their revenue from internet and data increased considerably, in Zimbabwe over 84% of internet usage is in the form of 3G,2G,GPRS,HSPD, EDGE group, the mobile operators are getting more internet and data business than the IAPs, there are more data capable cellphones than computers, the likes of Africom and Spiritage are struggling, The mobile operators will always have more data market share than the IAPs. Even the appbased services run on data from the operator.

  5. crumble says:

    time is catching up with econet. voice party was good while it lasted. they milked zimbos every way they could & modern technology has come to our rescue. its not that they dont want to fight whatsapp and viber. doing so would be futile. viva tech!!!!!!!!!!!!!

  6. MI5 says:

    Their ability to remain competitive depends on there ability to implement new technology…..lets say Econet create a HUB for developers/entrepreneur to come up with apps and ideas to monetize

  7. KuraiMGT says:

    How is WeChat faring in the Zimbo community, I tried, there was nothing atrocious with it, but I lost interest and remained loyal to Whatsapp

    1. Farai Sairai says:

      I installed, saw many Chinese users and removed it. No big deal.

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