Econet annual profit down to $36 million

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Econet released its annual financial results today. The company’s profit for the year, as generally expected, declined. This time by 10% to $36.2 million from $40.2 million the previous year.

Revenue was also decreased from $641 million to $622 million. EBDTA (which stands for earnings before interest, taxes, depreciation and amortization) also declined 6.4%. to $224 million from US$238.4 million.

EBIDTA essentially shows the company’s earnings if things like depreciation and debt interest are not taken into account, since telecoms companies spend lots of money on these things resulting in high figures that may not give a clear picture of the company’s alternative earnings. Econet for example is spending a lot on infrastructure upgrades to 4G.

In a press release announcing the results, Econet expresses confidence that these results are in fact good, suggesting things could have been worse if they did not use “innovation, effective market segmentation and solid infrastructure” to maintain a leading position in the market.

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Econet also asserts that they are no longer just a telecoms company but a fully-fledged Telecom, Media and Technology (TMT) company. CEO Douglas Mboweni confirmed the generally obvious that voice call revenues are down, but said that the decline is being compensated well by growth in data revenues.

Data (internet) and EcoCash, the two products the company is betting its future growth on, together contributed about $199 million. This is an unexpected slight increase to 32% from 29% last year. We expected the growth of the two to be much higher. EcoCash, we expected, would have significantly increased revenues especially as more people rely on it because of the cash crunch locally. Banks in Zimbabwe cashed in big on the cash crisis with electronic transaction fees.

We also expected much higher data consumption and therefore revenues. Econet likely knows this and made a deliberate effort to avoid comparing the contribution of EcoCash and Data to last year so that the lack of growth is bare. Instead they compared 32% contribution of 2017 to a 6% contribution from 5 years ago.

That aside, Econet also didn’t mention clearly what stage they are in of building their Media and E-commerce products, since the company’s entry into that space 2 years ago with the launch of Ownai and the regulatory hurdles to launch their media play, Kwese TV.

This too feels a little dishonest since Econet has been clear in previous results that the 3 pillars for the future are Mobile Financial Services, Broadband and Media & E-commerce. A one line mention of this is what we’ve been able to do (or not) would have been better in our opinion. Download the full announcement here.

Econet Zimbabwe Finance Director, Roy Chimanikire commented on the results:

Against the background of limited foreign currency, we continued exploring innovative ways to address this challenge. We believe that it is not the Government or the Reserve Bank of Zimbabwe alone that need to come up with solutions to the current challenges we face. Our need to address the imminent default on our loans due the limited availability of foreign currency saw us launching the largest capital raising exercise in the history of Zimbabwe Stock Exchange (ZSE). We are thankful to the support from our shareholders and all stakeholders which resulted in the Company raising sufficient capital to retire its foreign long-term bank debt. We are now in a stronger position to deal with the challenges of operating in an increasingly more difficult economic environment.

And Mboweni commented:

Going into the future we remain cognisant of the fact that our success hinges on meeting and exceeding our customers’ needs. Leveraging on our solid infrastructure we will continue to be innovative in order to respond proactively to environmental changes and take advantage of technological developments, especially in the areas of content, media and financial technology (Fintech)

EcoCashEconetDouglas Mboweni

EcoCash is a mobile money transfer facility which is run by Econet Wireless Zimbabwe. The facility has grown in leaps and bounds since its inception and is arguably the largest mobile money transfer agent considering the huge sums of transactions that the platform is said... Read More About EcoCash

Econet Wireless Zimbabwe, a subsidiary of Econet Wireless International, is the first and largest mobile network services provider in Zimbabwe. The telecoms giant became popular with its products and services such as Buddie. It has established branches in different corners of the country and enjoys... Read More About Econet

Douglas Mboweni is the current Chief Executive Officer of Econet Wireless Zimbabwe. He was the successor of Strive Masiyiwa Econet at in March 2002 and has been at the helm of the company since then. Since taking over, Mboweni has overseen the growth of what... Read More About Douglas Mboweni

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5 Comments

  1. Macd Chip says:

    Well done Econet. Revenue downfall from calls is now a norm which is being experienced around the world. Focusing on Data and Ecocash is a smart move and the figures coming out are already good start.

    Other telcos can copy and paste but one thing will set Econet apart from the rest, that is Ecocash!! Maybe second thing is operational efficience ie removing corruption and not running a company like a tuckshop.
    Econet can operate in any country and localise Ecocash platform to the local country market it is operating in, a feature which no other competitors here is Zim will ever match especially now that they are owned by government and will be singing the Sunctions mantra. There are no sunctions imposed by our African neibhours, but the noise will still be loud.

    1. Imi Vanhu Musadaro says:

      Ecocash was also copied from elsewhere. 😉

      1. Macd Chip says:

        ..and adapted for local market! Thats why there is a saying which states that there is nothing new under the sun 🙂

  2. YADAH FOR LIFE.....MUNGADIDI...I SAID IT says:

    its the economy stupid…….if u dnt encourage your 5 million consumers to vote next yr …..you will loose more than 10% profit nxt yr…..trust me on tht

  3. Gary says:

    Why are voice calls from Econet to Econet of such TERRIBLE quality? Nothing is worse than echo sounds of your voice and other irritating background noises. They still have a long way to go to meet the quality of vodacom’s calls. When I recieve a call from an econet number on my vodacom number the call is of HD quality. But it it the other way with Eco – Eco. I would just rather msg than hearing my own voice in the background. PLEASE IMPROVE THIS ECONET IT HAS BEEN GOING ON FOR MANY YEARS NOW. ARE YOU SURE YOU ARE STILL NOT on ANALOG?

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