Econet is profitable again. After posting a loss in 2024, Zimbabwe’s largest telecoms company made ZWG 2.35 billion in profit for the year ending February 2025.
Revenue was up 23%, data usage up 36%, and voice usage also saw growth. On the surface, things look rosy.
But as we’ve learnt from years of reading Zimbabwean financial statements, the truth is often hidden. So we had to dig a little into Econet’s financials.
And as the sketpics among us would have guessed, the story is a little more complicated.
Let’s talk about the nuggets buried in Econet’s 2025 report, because there’s a good chance you missed some of them. And they matter.
Auditors Not Digging the Numbers
You may not have noticed, but Econet got the worst kind of audit opinion: an adverse opinion.
That’s not a little insignificant thing, it’s the auditors (BDO Zimbabwe) saying, “We don’t believe these numbers give a fair picture of the company’s financial health.”
That’s the audit equivalent of saying ‘We don’t believe your CV.’
Why? Because Econet insists on reporting its results in ZWG, the currency introduced in 2024. But according to international standards (specifically IAS 21), Econet should be using USD as its functional currency. That’s what they’re actually operating in, based on pricing, cash flows, and the economy at large.
So when Econet says it made a profit, the question is: profit in what world? The ZWG world, which changes weekly? Or the USD world that customers and vendors actually live in?
The auditors couldn’t even quantify how far off the numbers might be. That is actually a big deal and means we have no idea if the actual position is much worse or miles better or just right.
Many of you guys share this sentiment as evidenced by some of commenting “Results in ZIG are meaningless” or something to that effect when we talked about Econet being back in the black.
Guesswork Plagues Profit Figures
To make things worse (or better?), Econet is also using what’s called hyperinflation accounting (IAS 29), which involves adjusting every line item using inflation indices.
Problem is, during the switch from ZWD to ZWG in April 2024, there were no official CPI stats, so Econet had to make up inflation estimates based on the poverty line.
Yes, you read that right. Poverty data was used to guess inflation, which was then used to revalue a telecoms giant’s earnings. That’s how we get numbers like “ZWG 22.2 billion in revenue.”
So while the headlines scream “23% revenue growth!”, an analyst reads that and thinks, “That’s probably just math gymnastics.”
Get this right, it’s not Econet’s fault that there were no official Consumer Price Index (CPI) stats to use. But still, we find ourselves in this position where those estimates affected the profits that were reported.
Share Buybacks Could be Problematic
This one’s subtle. Econet bought back ZWG 2.2 billion worth of its own shares, and then used ZWG 1.6 billion worth to pay for the EcoCash acquisitions.
It’s a smart move if Econet thinks its shares are undervalued, or if they’re trying to boost earnings per share (EPS) artificially. EPS is something shareholders kinda care about.
However, it can be a problem if they’re using accounting tricks to make the profit story look better than it is.
The reality is that it’s probably a bit of both. Let’s get into why that is.
Why The Buyback Could be a Problem
Econet spent ZWG 2.2 billion buying back its own shares this past year. That was a massive increase compared to just ZWG 357 million the year before. On top of that, they used ZWG 1.6 billion worth of those shares to pay for EcoCash and the other companies they absorbed.
On paper, this seems like a clever financial play: reduce the number of shares in circulation and use your own stock as currency to buy new businesses.
But here’s the catch: buybacks artificially boost a key metric—earnings per share (EPS).
Like I said above, EPS is kinda important to investors. It is the profit divided by the number of shares in circulation. Investors love a rising EPS because it suggests the company is becoming more profitable for each share you own.
Let’s say Econet makes ZWG 2 billion in profit. If there are 2 billion shares, EPS is ZWG 1. But if they buy back 500 million shares, now there are only 1.5 billion shares. Then, EPS jumps to ZWG 1.33, even though actual profit hasn’t changed.
So while the EPS rises, it’s not because the company made more money, it’s because the company reduced the number of shares.
That’s why analysts sometimes call this an “optical illusion of profitability.”
And considering Econet just came out of a loss-making year, it’s fair to ask: Are they using buybacks to make this profit rebound look stronger than it really is?
This move could also help support the share price on the ZSE, which is important when public trust is fragile as it has been for decades and currency confusion is high, again a decades-long problem.
I have to stress that this buyback strategy is not illegal, and sometimes it’s smart capital management. But when you combine this with an adverse audit opinion, recent history of losses, and hyperinflation reporting shenanigans, it starts to look a lot like window dressing.
The Valuation of Liquid Is Yet Another Guess
Econet owns a ZWG 3.1 billion stake in Liquid Telecom. That valuation is based on Level 3 inputs, meaning Econet’s own internal estimates.
A 5% change in their assumptions could swing the value up or down by ZWG 212 million.
There’s always a temptation to make the numbers look good, especially when you control the valuation assumptions. That’s why analysts and auditors keep a close eye on these kinds of assets.
I’m not saying that’s what happened but since it’s somewhat subjective, you can see why some analysts might not like this. Hence why the auditors said it was a key audit matter.
Foreign Currency Problems Never Left
One line buried in Econet’s financials shows that that old familiar problem still haunts the company:
Econet has a negative working capital position of ZWG 1.8 billion.
In simple English, it means Econet owes more in the short term than it currently has available to pay. Which is obviously not ideal.
Now, why is this happening? The report tells us:
- A big chunk of Econet’s debt is denominated in USD, but…
- Much of its revenue is still regulated and priced in ZWG.
- And thanks to exchange rate volatility, Econet is sitting on heavy unrealised exchange losses.
In short, Econet is caught in the classic Zimbabwean corporate trap:
- Costs in hard currency,
- Revenue in a Baby-Soft currency,
- And tariffs controlled by the regulator (POTRAZ).
That’s like running a business where the stuff you buy is priced in gold, but you’re only allowed to charge customers in river stones, and you have to get permission to change prices.
Why this matters:
Econet says they’re working on it:
- Negotiating with lenders to stretch loan terms,
- Engaging regulators to “align tariffs with costs,”
But none of those things fix the core problem: Zimbabwe is a dual-currency economy, and Econet is being forced to operate with one hand tied behind its back.
This is how you can tell that this sitaution is hurting Econet financially:
- Exchange losses reduced Econet’s profits and it wasn’t a small figure too. We’re talking ZWG 2.1 billion in exchange losses.
- The negative working capital shows Econet is under short-term financial strain.
- And yet they still pulled off ZWG 3.6 billion in new capital expenditure. This is bold, but risky. However, it was absolutely necessary to modernise their network to be able to compete as competition looks set to increase in the market.
As one analyst put it: “They’re borrowing in USD, selling in ZWG, and hoping for the best.”
If foreign currency exposure isn’t resolved, all the growth in data and EcoCash won’t matter, the debt could bite hard in the next reporting period.
So, it’s Complicated Then?
Yes. The final position is simple: Econet’s results are just estimations, not truths.
You cannot read ZWG-denominated results in a hyperinflationary economy with a stable USD parallel market and walk away thinking everything is crystal clear. It isn’t.
What do you think? Does Econet look like it’s back on solid ground, or are the cracks deeper than they appear? Let us know in the comments.
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