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Econet Zimbabwe profits down by 42% to $40 million as operator faces challenges in environment

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Econet Wireless HQ

Local mobile operator Econet Wireless is currently holding its analysts’ briefing where it has released the figures for the 2015 to 2016 financial year.

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Though the full briefing is yet to be released some of the highlights have been shared by analysts on Twitter and they indicate a pattern similar to the previous year’s performance which was weighed down by challenges in a tough operating environment.

  • Revenue for the year was down to $641 million which was a 14% decrease from the previous year’s $746 million income total
  • Earnings Before Interest and Tax (EBITDA) declined from $286 million to $238 million this year 
  • Proft after tax stood at $40 million which is a decline from the $70 million last year
  • Revenue from broadband services has continued to grow, albeit at a much slower rate(9.7%) than last year(43%) It has increased by $10 million from $103 million to $113 million.
  • Broadband services contributed 18% to the group’s total revenue which is a 4% increase from the previous year’s 14% contribution
  • Mobile financial services contributed $87 million in the past year,which was an increase from the $73 million in the previous period. EcoCash, the main service in this line handled transactions valued at $6.6 billion, a 20 percent increase from the $5.5 billion handled in the previous year.
  • Econet has reduced its investment with capital expenditure dropping from $125 million in the previous year to $83 million in the latest period.

Update – In an earlier version of the article, we stated that EcoCash revenues for the year declined from $87 million to $73 million, which was incorrect. EcoCash revenues actually increased from $73 million to $87 million.

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11 thoughts on “Econet Zimbabwe profits down by 42% to $40 million as operator faces challenges in environment

  1. A sign of the strugging Zim economy. And the Leadership doesnt care nor do they have a clue. #ThisFlag

    1. Once upon a time, a small-time investor was looking to invest his hard-earned money in a local Zimbabwean business. The investor was advised to follow Econet Wireless and tipped to buy stock if the share price fell below 20 cents. As time went by, the stock price crashed from 45 to 35 to 25 to 21 cents. Realising his opportunity was near, the investor began researching the business and was shocked by what he found.

      Following conversations with sources close to the action, the investor soon realised that the privately-owned Econet Group, controlled by Mr. Masiwya, was effectively looting funds from the publicly-traded Econet Wireless Zimbabwe. Apparently, “a team of forensic auditors would have a field day,” he overheard at a local Church event.

      For starters, “look how the Group’s off-shore companies are charging grossly inflated prices for services forced upon the operator and then free-riding off the operator’s back.” After hearing this, he thought, “If I was a shareholder, I would want to know what funds had been stripped from the business to fatten the pockets of its foreign-based and largest shareholder.”

      This small-time investor had a lucky escape. But what about existing and future shareholders? He decided it was his duty to make others aware of these unethical business practices so they could be investigated before the evidence gets covered up. For unlike Mr. Masiwya, who flies over Zimbabwe in his private jet, he knew fellow local investors deserve to hear the truth about conflicts of interest and the abuse of power.

  2. Please give clarity on Econets expenses. In particular IP Transit for internet access, Liquids Roll Out, Steward Bank and Econet Services Expenses.
    Are they not bank rolling Liquid and Steward etc.
    Also have they finally stopped paying crazy fees to their sister companies for services in order to make it look like they are not making money when they are?

  3. Still hiding their massive payouts to Liquid Telecom, I see. Strive’s genius way of taking money out of Zim and paying himself while government sleeps and lesser shareholders are asked to celebrate a pittance.

    1. It is actually quite incredible.
      Liquid pays upwards of $1500 per Mbps to Liquid Mauritius for a Mbps of capacity that Liquid Mauritius probably buys for $80.
      Then Liquid sells the same 1Mbps for anything below $700… something very fishy about that.
      I actually dare a Liquid representative to come and prove otherwise. The finance guys had a lot of interesting things to say around this whole business.

      Beyond that lets see
      Who does buddie airtime – TPS –> who is TPS well they are a subsidiary of Liquid. I bet you $1 juice card costs $5 to print.
      Who does the point of sale devices that Econet Services gets –> TPS –> Liquid

      Its all one big convoluted circle and I guess you dont investigate things like that when a company employs 1000 workers.

  4. well its not their fault and on the broadband side yes there us a huge payment to liquid but then again what other country pays in cold hard currency. but for the fibre to get here they have to pay landing fees at the point the cable lands then fees etc for 2 countries Mozambique and Zimbabwe plus investment and maintainance of infrastructure.
    and its not their fault gvt is buy trying to overcharge and cause project overruns so as to maximise profit.

    1. Nope.
      Landing costs and infrastructure costs are billed separately.
      The fiber roll out is also billed as a separate CAPEX cost so yes you can try and cover it up but you are way of the mark

      1. well the gvt let econet become a monopoly by employing incompetent managers but honstly speaking econet seems to be using zim to sponsor other businesses and causing a shortfall to zim shareholders. as they get nothing from the operations o econet global.
        ps why does it seem econet hires only relatives now and also they seem not to care about information security and its a company that people looking for free access to information or money can milk with the help of arrogance of econet employees who are too busy trying to keep jons to notice this.

  5. The rushed decision to terminate VAS products last year is proving to be costly. The world over, it is clear that voice and sms are slowing fast but the data side is growing fast. Some of the data growth comes from consumption of various products that constitute your VAS portfolio and especially working with content providers to stimulate appetite for various content based VAS. The approach of an MNO being its own VAS provider, a content player has its own challenges. Open up to a new set of players who take advantage of the existing infrastructure to offer a new mix of products on a win-win basis and the uptake will increase. They should cultivate innovation outside internal structures and benefit from a free ecosystem of innovative players out there…

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