Econet Wireless Zimbabwe has released a trading and performance update that covers the period ending August 31st 2020. Beyond giving as look into the figures, the report gives insight into the operating environment and the business’ performance.
Here are some of the highlights from the report.
The first 8 months of the year have been challenging for the country’s biggest telecommunications company. The last five or so months have been dominated by the COVID-19 pandemic. However, as much as the COVID-19 pandemic has impacted the company’s business, Zimbabwe’s unstable economy has been a bigger problem.
This isn’t just about Econet, the performance of the telecoms sector as a whole is largely dependant on the economic environment. Zimbabwe’s unstable economy has affected the levels of service demand, consumption, operational costs and investment.
Although the company has been facing difficulties, they are still the industry leaders.
Tariffs and costs
Econet, like all the other telecoms companies, were hampered by the rapid decline of the local currency. This was made worse by the fact that Econet relies on foreign currency to fulfil some operational requirements, which include:
- Software Upgrades
- Network support services
- Operating software licences
The runaway inflation and exchange rate caused the company’s operational costs to skyrocket. In response to this, POTRAZ implemented an inflation-linked pricing system. The pricing structure referred to as TPI (Telecommunication Pricing Index), takes into account operational costs to determine a viable tariff.
In the report, Econet also welcomed the Foreign Exchange Auction System launched by the RBZ in June.
Due to public health measure brought on by the COVID-19 pandemic, the need for telecommunications services has increased. The biggest mover was, of course, mobile data going up by 63%. Voice and SMS traffic were no different, climbing by 7.9% and 41.6% respectively compared to figures over the same period last year.
Econet implemented a rigorous cost reduction strategy which required all it’s suppliers to reduce costs by 20%. The report also goes on to say that the operating margins are at about 40% EBITDA (Earnings Before Interest Depreciation Tax and Amortisation).
For those who want to go over the report in detail, you can do so with the link below.