Econet shakes up to ride out crisis
. . . as telecoms giant glides into digital operation
ZIMBABWE Stock Exchange listed telecoms giant, Econet Wireless Zimbabwe says it is casting its net wide to identify fresh opportunities on the domestic market, while scanning the global terrain to see how evolving technological trends can unlock growth stimulating innovations.
Twinned with this strategy will be a plan to shift the business from a communications service provider to a broad tech operation that responds to market dynamics, according to chairman James Myers.
The Econet chief said on Monday this dynamism had helped the firm pull through the 2007/2008 hyperinflation phase of Zimbabwe’s pro-longed economic crisis, ending up with a business that currently serves 12,6 million subscribers.
In commentary to the group’s financial results for the half year ended August 31, 2020, Myers said Econet’s voice traffic enjoyed 83% market share.
“Our ability to transform the business and swiftly adopt new technologies has
been demonstrated as communications technology evolved from GPRS (2G), 3G, 4G (LTE) and now 5G,” Myers said.
The company continues to explore new opportunities presented by the local conditions as well as global technological trends.
We are now making bold steps to pivot our strategy from a communications service provider to a digital services provider . . . the business has continued to grow, despite the difficult operating environment. The company’s strategy has adapted to the changes in the operating environment over the last 20 years,” Myers said.
He spoke as Zimbabwe’s largest telecoms firm saw inflation adjusted loss plummet to $84,98 million from $11,1 billion in 2019.
He said exchange losses were among the biggest drawbacks.
Revenues fell by 6,5% to $10,1 billion during the period, from $10,8 billion previously, according to the statement.
The period was dominated by the outbreak of the COVID-19 pandemic, which hit consumer spending habits on the market.
However, total assets rose nearly 10% to $56,97 billion during the period, from $51,99 billion.
The pressures piled on the business by exchange losses were significant, the report noted.
“The group incurred exchange losses of $10,3 billion as a result of its exposure in foreign currency denominated obligations. Exchange losses continue to weigh down on business performance, although, when viewed as multi-year commitment, the business is able to meet its outstanding obligations, over time, if the tariffs are maintained at viable levels, which is currently the case,” Econet said.
Exchange losses have affected most businesses in Zimbabwe, where market volatilities have made it difficult for companies to plan.
Currency volatilities that affected the market before June led to a serious erosion of wages, with implications on the way consumers choose to spend.
In the past six months, however, the Zimbabwe dollar has stabilised against the greenback at US$1:$81, leveraging of the foreign currency auction system.
The auction system has also defused a rampaging parallel market rate, which has declined from US$1:$120 before the launch of the auction system to US$1:$110.
The full impact of this stabilisation on firm operations will be seen when companies report year-end financial results early 2021.But authorities responded by giving telecoms firms the greenlight to make changes to pricing models during the period.
The Econet boss said already, the directive has had positive spinoffs to the business.
“The regulator Postal and Telecommunications Regulatory Authority) granted permission to mobile operators to determine Zimbabwe-dollar tariffs as a function of base pre-approved United States dollar tariffs and auction-based interbank rates monitored and reviewed on an ongoing basis by the authority,” Myers said.
“This has narrowed the gap between current tariffs and industry optimal tariffs which has started to generate increased capacity to settle foreign currency obligations,” he said.