Econet foreign shareholders’ payments need bank approval
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.
“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.