On the 29th of May this year, Econet published a special trading update on the investor section of their website. It seems a number of local publications missed this (including ourselves) but now that we have come to speed and know that the document exists, it’s important to take a look at what was in there. Better late than never!
Econet bemoaned the operating environment, laying blame on COVID-19 and a weak economy for the underwhelming performance;
The country has continued to experience a general decline in economic activity and aggregate demand across all sectors of the economy in the wake of the national lockdown and depressed disposable incomes.
The update went on to note that voice, data and SMS traffic declined by 5.4%,15.6% and 6.2% respectively compared to the first quarter of last year.
Interestingly, Econet noted that an increase in consumption of data due to the lockdown hadn’t made as huge a difference to their revenue;
Although data traffic has been increasing since the start of the national lockdown due to more people working from home, making use of digital video conferencing channels, increased e-learning activity as well as the increased social media activity, the increase was not sufficient to offset the overall decline in real revenues caused by the lockdown as well as the declining economic fundamentals.
In that same investor update, Econet also complained that POTRAZs Telecommunications Pricing Index (TPI) which is used to review tariffs has been ineffective because the reviews are slow;
The telecommunications regulator has adopted the Telecommunications Pricing Index (TPI) as the tool for setting tariffs. However, the frequency and responsiveness to rapid market changes has been slow resulting in our real tariffs being severely undermined.
Ultimately, Econet is forecasting that the depressed demand for their service will continue in the short term due to economic volatility. One of the ways they are trying to counter this is by reducing operating expenditure by 20% – remember that letter to suppliers a few months back? That was part of that targeted reduction.
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