Econet’s Financial Results for 2017 are out and it seems 2017 was a good year for them. Their Profit After Tax rose from $36.2m to $132.3 million; a quite-surprising growth of 265%. That’s 3.6X growth right there (and profit not revenue: impressive.
There are a few obvious factors we can point to that show us why they ended up with these figures…
Econet’s subscriber base rose from 10.3 million – 11.4 million subscribers which is a leap of 1.1 million new subscribers. Econet gets revenue from these subscribers through multiple channels such as voice, data, SMS, and the cash cow that is EcoCash. There are also other services like EcoSure which also add to these revenues so though the Profit After Tax has risen wildly when you look at all the services that Econet offers this growth is not too wild.
Let’s talk about EcoCash for a moment…
The cash-crisis was one of if not the best thing to ever happen to EcoCash (Econet’s mobile money service). Due to this cash crisis, Zim became a digital economy and the service which was most ready for this digital economy was EcoCash. Their subscriber base grew exponentially and because they had already established a ridiculously wide agent and merchant network they could stand toe-to-toe against the banks when physical money became scarce.
EcoCash also directly drove the subscriber growth because once the cash issues started escalating, NetOne and Telecel subscribers had to buy an Econet line so that it would be easier to send money to their friends and relatives since everyone seemed to be on EcoCash. EcoCash also had a larger number (by far) of merchants when compared to Telecash and OneWallet (now OneMoney).
Of course now, subscribers don’t need to leave the rival networks to register for Ecocash as long as they have a smartphone and data to access the Ecocash app.
And Steward Bank too…
Most of us are probably aware of the fact that when the cash crisis was at its peak (is it still at its peak?) the majority of banks were not opening accounts because they simply did not have money to give to customers. Well, Steward kept opening accounts. 176 000 new customers, if we’re being exact. Now, due to the cash crisis and the bad economy generally, banks are making money out of transaction fees and not lending. This means that whoever has the most people earns more holding all things constant.
Is this the effect of the Bond?
Someone may choose to water down the growth to $132 million saying due to the the Bond note money and RTGS money that Econet obviously has cannot compare to the real USD they were earning in the previous year. However, the US$ only carries a 40% (around 40% at least) premium on the RTGS money and this difference cannot offset a 3.6X growth, not at all. If we factor in these rates and we change the profits from RTGS money to US$ (the things we have to do in Zimbabwe futi…) the profits are still huge as they end up around $92.28 million which is still close to 3 times their previous profit
We will continue to look at Econet’s Financial Results for the just-ended year and point out some of the interesting things we see. What do you think drove this massive growth? Type away in the comments below and let’s hear what you think.