Econet to remain dominant in Zim telecoms sector

FINANCIAL and equity analysts, IH Securities, believe Econet Wireless will remain the dominant company in the telecommunications sector, despite seemingly losing about 9,3 percent of the market share.

"The year 2012 brought the most significant level of competition we have seen in the Zimbabwean telecommunications market thus far, and may mark the beginning of heightened competition in the sector," IH Securities said in its latest research findings.

IH Securities believe Telecel has registered a cumulative increase in subscribers of 67 percent in the last 12 months while NetOne is thought to have gained 34 percent more customers.

IH Securities noted that the country's biggest mobile phone operator recorded the least increase in subscriber numbers after its customers went up by an estimated 26 percent.

"Econet has responded with its own promotions and marketing campaigns," said the report, "and these have decelerated the company's loss in market share. We believe that the capital constraints Econet's competitors face will limit the development of their networks, limiting their ability to aggressively add more subscribers.

"Our view is that Econet's market share will remain above 60 percent in the short to medium term."

Econet is the country's biggest mobile phone operator and Telecel has been a distant second for a while. It targeted 2,7 million subscribers by the end of 2012 from 2,2 million in September 2012. NetOne said it targeted 3 million customers by the end of 2012.

Against the background of cut-throat competition in the mobile sector, analysts believe value added services lend support to the companies' Average Revenue Per User (ARPU).

IH Securities predicted that as the country's mobile penetration nears 100 percent, mobile network operators would find themselves needing to diversify revenues with Value Added Services, expected to lend some support to ARPUs in the sector.

Their  report concluded that, as expected with the significant increase in mobile penetration in the country, Econet's ARPUs have declined from $12,90 in 2010 to $8,50 in 2012 "and we forecast ARPUs of $8,13 in financial year 2013".

But it also contends that Zimbabwe's telecommunications industry seems to punch above its weight in its demand for data, with internet penetration now estimated at 35 percent, compared with an average of 15 percent in the rest of Africa.

Econet and other mobile operators have spearheaded the increase in internet usage, making up 58 percent of usage in Zimbabwe. IH Securities  believe the lower cost of phones compared with computers and modems will see this remain the case.

In addition to data, Econet has also launched Eco-cash, a mobile money transfer platform similar to M-Pesa, the hugely successful forerunner mobile money transfer facility in Kenya.

"We believe the level of financial exclusion in the market, juxtaposed against high mobile penetration, the distribution of agents rivalling that of M-PESA at this stage, and largely accommodative regulator are some of the factors pointing to the product succeeding in this market.

"We expect to see medium-term support for Average Revenue Per User from these services," IH Securities said.