Econet for­eign share­hold­ers’ pay­ments need bank ap­proval

The Star Early Edition - - NEWS - Tawanda Karombo

ZIM­BABWE’S Econet Wire­less may have de­clared a 46 cents div­i­dend, but for­eign share­hold­ers in the com­pany will only be smil­ing to the bank when the cen­tral bank ap­proves re­mit­tances for their pay­ments, while they also have to make sep­a­rate ar­range­ments with lo­cal banks to speed up pay­ments.

Econet Wire­less is Zim­babwe’s big­gest tele­coms op­er­a­tor with more than 10 mil­lion reg­is­tered net­work users. Its stock on the Zim­babwe Stock Ex­change at­tracts huge in­ter­est from for­eign in­vestors and trade deals in its shares have been firm­ing in the past few weeks.

The com­pany yes­ter­day re­ported a 3 per­cent de­cline in rev­enues to $621.7 mil­lion (R8.12 bil­lion) for the full year pe­riod to the end of Fe­bru­ary 2017. Af­ter tax prof­its were lower by about 10 per­cent at $36.1m.

The dip in af­ter tax prof­its has been at­trib­uted to wors­en­ing eco­nomic con­di­tions that are curb­ing con­sumer spend­ing and mount­ing statu­tory pay­ments to the govern­ment, with about 28.8c from each $1 go­ing to the state. Ba­sic and di­luted earn­ings per share for the pe­riod stood at 2.7c, lead­ing to a div­i­dend of about 46c per share.

How­ever, the div­i­dend pay-out for for­eign share­hold­ers will not be a stroll in the park as Zim­babwe is fac­ing acute for­eign cur­rency and lo­cal bond notes short­ages.

Guide­lines

“Pay­ments to for­eign share­hold­ers will be sub­ject to ex­change con­trol ap­proval and pay­ment guide­lines for for­eign re­mit­tances,” Econet Wire­less chair­per­son James My­ers said yes­ter­day.

Other com­pa­nies such as AB InBev’s as­so­ciate unit in Zim­babwe, Delta Cor­po­ra­tion, are also sit­ting on large amounts in for­eign share­hold­ers’ div­i­dends that have not yet been paid out.

The Re­serve Bank of Zim­babwe uses a strict pri­or­ity list for for­eign and in­ter­na­tional pay­ments.

The div­i­dend for Econet Wire­less will be paid around June 22 and the com­pany has ad­vised that a 10 per­cent with­hold­ing tax will be ap­pli­ca­ble. It has also ad­vised the for­eign share­hold­ers to open lo­cal bank ac­counts to re­ceive the div­i­dend.

“For­eign share­hold­ers should ap­point or make their own ar­range­ments with a lo­cal bank of their choice to re­ceive their div­i­dend on their be­half and to fa­cil­i­tate re­mit­tances to them,” My­ers added.

How­ever, once paid into lo­cal ac­counts, it may take longer to then pay to a for­eign bank as Zim­babwe has run up a back­log of in­ter­na­tional pay­ments.

“It is a trend that is be­com­ing a cause of worry as com­pa­nies are in­creas­ingly find­ing it dif­fi­cult to pay for­eign share­hold­ers. At the same time they also have to ap­ply to make pay­ments for raw ma­te­ri­als and equip­ment,” said one man­ager at a lo­cal bank.

But apart from the woes in pay­ing for­eign share­hold­ers, Econet Wire­less said it was to en­hance in­vest­ment into data and con­tent ser­vices as voice in­come con­tin­ues to take a knock.

The com­pany has also had re­sound­ing suc­cess with its EcoCash mo­bile money plat­form.

The com­pany is also de­mand­ing an “en­abling reg­u­la­tory en­vi­ron­ment” which it says will go a long way in pro­vid­ing “the sup­port re­quired for tech­nol­ogy busi­nesses in Zim­babwe to re­main vi­able” in light of grow­ing tech ad­vance­ments.

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