ECONET PROF­ITS PLUNGE 37PC Opts for cost re­duc­tion

Chronicle (Zimbabwe) - - Business Chronicle - Oliver Kazunga

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.

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