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Econet Manages To Squeeze More From Their Customers: Average Revenue Per User Up

Econet Wireless HQ, $20 million

Talk about stellar results. Yesterday, the Econet group released the financial results for the year ended 28 February 2018. We were impressed to find that profits after tax were up 125% to $132m whilst revenue was up 34% to $831.6 million. EcoCash was responsible for a huge chunk of that growth and is growing in importance to Econet’s bottom-line, contributing close to 30% of the group’s revenues.

Econet is a diversified group following the TMT model: Telecommunications. Media and Technology. They have millions of customers being served by multiple subsidiaries.

How does a business grow its revenue?

A business can achieve this in two ways:

  • increase revenue from current customers by getting them to pay more
  • get new paying customers

Econet happened to succeed on both fronts.

Increasing revenue from current customers

The first method is indicated by the increase in average revenue per user (ARPU). This useful statistic is calculated by dividing the revenue by the number of customers/subscribers and indicates how much each customer paid in the year. The ARPU was $9.73 in the year ended February 2018 compared to $6.55 for the previous year. That is a 49% increase.

New products were launched into the market. Kwese TV is a good example and it came in as a completely new service and so the existing customers added Kwese subscriptions to their other subscriptions, broadband, voice etc.

The increase is however down to many factors. For starters, customers have to find value in the products and services on offer. The state of the economy helped make EcoCash more essential to the customers. Econet grabbed that opportunity with both hands and worked to increase the number of banks integrated with EcoCash, increasing convenience for customers which helped increase use.

Econet even opened the EcoCash service to non-Econet users but that was on the last day of the financial year in question. Results of that move will be seen in the following year.

The other Fintech company in the group, Steward Bank performed exceptionally as well. Not only were new customers added, the niggling system challenges were fixed. With increased reliability customers transacted more with their accounts.

This investment in infrastructure is across the board. During the year capital expenditure for the group increased by a whopping 212% to reach $102.7 million. This investment is what makes it possible for the subsidiaries to offer reliable and superior service.

Take for instance Econet broadband. Everyone will tell you that of all the mobile network operators, Econet’s data is the most expensive and yet people are not ‘moving over’ in droves. Why is that? It is well known too that the competitors do not offer the same reliability, quality or coverage. Data revenue was up 18% in the year as subscriber increased by 1.1 million, that is despite people having the option to switch to the vastly cheaper OneFusion offered by NetOne.

That’s what $1.3 billion in infrastructure investment since 2009 gets you.

New customers were added too

The growth in average revenue per user would have been impressive all on its own considering the near saturation of the market in some fields. However, millions of new customers were added. They came in wielding their hard-earned bond notes and clickity clank they went into the Econet piggy.

The infrastructure investment also increases capacity to absorb new customers. So even as new customers joined the Econet family, everything continued to work as intended.

I don’t think anyone can overstate how impressive the Econet group’s results are. The year in question was not a good one for Zimbabweans. The economy remains challenging and yet Econet seems to be flying even higher.

Quick NetOne, Econet, And Telecel Airtime Recharge

3 thoughts on “Econet Manages To Squeeze More From Their Customers: Average Revenue Per User Up

  1. On the data part I moved over to netone… Their 4g is very good but they got me on ecocash… I’m starting to use it more than my bank card…I don’t have to carry anything other than my phone plus when I’m short my family can just send what I need in seconds… Can’t beat convenience and I’m Pro netone… If they want to compete then they got to do it with banks and move money seamlessly

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