ECONET PROFITS PLUNGE 37PC Opts for cost reduction
ECONET Wireless Zimbabwe says it recorded a 37.14 percent drop in profit after tax to 14,9 million for the half year ended August 31, 2016 from $23.8 million during the same period last year due to the difficult economic environment.
The group’s revenue for the period under review was $301 million, 6.7 percent less when compared to $323 million for the same period in 2015.
In a statement accompanying the group’s financials, the telecommunications firm’s chairman Dr James Myers said profitability was affected by the decline in revenue as a result of the difficult economic environment.
“Profit after taxation was $14.9 million compared to $23.8 million for the year. Profitability was affected by the decline in revenues as a result of the difficult economic environment.
“We have, therefore, continued to focus on cost reduction in order to protect margins and profitability,” said Dr Myers.
Econet’s capital expenditure during the period also decreased from 16.6 percent to 5.1 percent.
Despite the negative performance, Dr Myers said the business continued focusing on growing revenue, particularly from data and mobile financial services, which registered double digit growth of 11 percent and 22 percent respectively.
He said financial services revenue contribution constituted 34 percent of total group revenue, and this validates Econet’s strategy that began a few years ago to grow non-voice revenues.
Dr Myers said Econet successfully concluded the network modernisation project, which resulted in the deployment of over 400 new LTE sites and upgrades to over 250 3G sites.
“An additional 88 new Wi-Fi coverage sites were made countrywide. In terms of coverage, speeds and user experience, the Econet network remains unrivalled in its performance. Customers can now enjoy enhanced Internet experience through increased data capacity and performance,” he said.
“Data billing capacity was upgraded to cater for increased data traffic and complexity as well as to offer quality user experience and value for money to our customers.”
Dr Myers said the giant telecommunication firm recognises partnerships as key to the imperatives of EcoCash, a mobile money transfer platform.
“In view of the need to increase remittances and complement efforts by Government to generate foreign currency for the country, we entered into partnerships with various Mobile Transfer Agencies (MTAs) including MoneyGram, Western Union and WorldRemit.
“EcoCash now has nine partnerships with various MTAs. Our EcoCash platform continues to grow supported by a wide network of agents and merchants that accept EcoCash as a mode of payment,” he said.
Turning to Econet business’ contribution to the economy, he said, since the adoption of a multicurrency system in February 2009, the mobile network operator had remitted $1,2 billion in cumulative taxes and levies to the Government and statutory bodies.
The company was recently recognised for being the highest contributor to Value Added Tax for the tax year ended December 31, 2015.