Business / Companies
Econet finalising a syndicated $307 million loan facility
25 Apr 2012 at 13:03hrs | Views
HARARE - Econet is finalising a syndicated $307 million loan facility with a group of international banks, part of which will be used to restructure debt, management told analysts yesterday.
CEO Douglas Mboweni said he was not able to give "specific" details of the $307 million citing negotiations with the financiers are still in progress but it had been "carefully thought of and unlocks more value than before".
He added that the funding will bring major developments and is the "most exciting development to happen in this country and will bring major funding that will finalise critical aspects of the network".
Giving an operational overview Mboweni reiterated the principle of sowing and reaping saying the company was now seeing the effect of the investment and that once the equipment is on the ground its time to be innovative citing Ecocash as an example.
He also said Econet was in this country for the "long haul" (long term) and still has a long way to go given what has happened in other countries like Botswana and South Africa.
He said the company will realise more benefits from the infrastructure "we have put on the ground".
"We have linked Harare-Bulawayo-Beitbridge and Harare-Masvingo-Beitbridge with fibre as we see more potential from data," he added.
Econet has also connected a fibre link from Harare to Chirundu such that calls between Harare and Zambia are now going direct without going via London as was the case previously.
On the operational challenges Mboweni noted the delays in approval of site permits, frequent commercial power outages, delays in payment of interconnect debts and deteriorating access roads to sites adding that the group has had to "do the roads ourselves in order to access certain areas in the rural areas."
He also paid tribute to Potraz especially for coming up with the cost based tariff model.
Giving a strategic overview Mboweni said the group sees value in voice as mobile penetration continues to grow and will now focus on customer retention on high value segments and expanding coverage.
The company will also increase data coverage and capacity and expand product offerings for overlays to include solar, health and mobile money services.
He added that there is a team from head office (EWG) spearheading initiatives and innovations on solar products to make sure that users in rural areas have access to the network.
Econet had 31 "New Generation shops" to enhance customer experience and expanded distribution footprint to over 1 600 outlets and over 1 400 EcoCash agents currently spread across the country.
He lamented the costs of powering base stations as at times 70% of base stations will be on generator power and that involves huge amounts of diesel, fleet of cars and manpower to manage it.
"We are doing something about it and have taken an initiative to equip the base stations to report back to the head office if the diesel is being consumed at a rate above normal...using electronic reporting system via SMS," he said.
Mboweni said because of the widest coverage of the network the group will be introducing location based services as part of overlays.
Market share is over 70% with Telecel coming second at 17% and Net*One with 13% of the market.
The country's mobile penetration rate, which increased to 74% from 66%, has the capacity to go above 100% by 2015 like what has happened in Botswana and South Africa.
Mboweni defended the share buyback saying it's a way of making sure shareholders are given serious returns. During the year the company bought back 6.803 million shares at a cost of $28.5 million.
Commenting on the evolution of network technology Mboweni noted that "we are on the edge of the latest trends" adding that Zimbabwe was rated as number 5 in internet speeds mainly because of investments made by Econet.
Subscribers rose by 16% to 6.4 million from about 1.2 million in 2009 and 5.5 million last year.
"Ecocash has given us a strong conviction that there is no person in Zimbabwe who cannot do without a mobile phone"
He said Econet will be bringing products that are relevant to the citizens of this country and Ecocash is the beginning.
About $700 million was being transmitted to Zimbabwe from South Africa annually and Econet sees a huge opportunity for its MMT services.
Presenting the financials FD Kris Chirairo said the 16% growth in subscribers saw the company registering strong performance with revenues rising 25% to $611 million from $493.5 million previously as a result of strong growth in voice and data revenues, usage and subscriber uptake.
EBITDA was up by 20% to $290.9 million because of the significant growth in operating costs "but we have taken initiatives which we expect to have a positive impact on our EBITDA", Chirairo said.
Profit after-tax 18% up to $165.7 million, up from $141 million in 2011.
The Average Revenue per User (ARPU) increased by 6% to $10,33 from $9,78 while EPS at $1 was 20% up from 83c in 2011.
Chirairo noted that ARPU had started at $17,28 dropped to $9,78 and now at $10,33 and this a result of higher usage as well as addition of new subscribers.
"We will defend our ARPU at not less than $10 going forward," he added.
Voice was the biggest contributor to revenue at 68% while interconnect was down by 2 percentage points to 15% from 17% "because we are seeing more intra calls of Econet to Econet calls," Chirairo added. Other devices remained static at 4%.
Chirairo also noted the company's contribution to national development saying the company had paid a cumulative $414 million in taxes since dollarisation.
Capex cumulative figure at $640 million in the past 3 years had resulted in subscribers increasing to 6.4 million. Total assets grew by 27% to $812.4 million.
Capex to revenue ratio continued to decline to 30% as some of the projects had been completed and we expect the decline to continue.
Debt stood at $249 million while debt to equity ratio improved due to profitability and retirement of debt. Future expansion will be financed largely from internal resources. He also said the group was renegotiating to extend the tenure of facilities and access new lines of credit.
He added that because of the terms and conditions of the $307 million syndicated facility the company saw it prudent not to declare a final dividend.
Giving an outlook Mboweni noted that voice continued to be strong and will continue until "we cover the whole population" and maintain market leadership.
He also said engineers are currently working with suppliers to come up with rural base stations at a fraction of the costs incurred in urban areas.
The company will also be deploying micro base stations in city buildings so that indoor coverage is balanced.
On Data he said the foundation platform has already been set and the fibre is now underground ready to carry more traffic.
On EcoCash he said the company is working on growing mobile money where there will be no need to handle cash and is finalising one of the best advanced platforms that will enable wallet to wallet transactions including banks interface".
Responding to the impact of new players in Data Mboweeni said out of the licensed 11 players there were only 3 serious players "we have seen their traffic and we have not felt challenged."
When asked to give usage numbers of the 1 million EcoCash subscribers and revenue contribution Mboweni said he was not in a position to divulge the figures as they wanted to give the product time to stabilise adding that products of this nature need 24 months to stabilise.
On Ecolife Mboweni said the product remains terminated for now and there are issues in the courts "but whenever there is a need in the market, that need must be met and initiatives will be announced in future".
CEO Douglas Mboweni said he was not able to give "specific" details of the $307 million citing negotiations with the financiers are still in progress but it had been "carefully thought of and unlocks more value than before".
He added that the funding will bring major developments and is the "most exciting development to happen in this country and will bring major funding that will finalise critical aspects of the network".
Giving an operational overview Mboweni reiterated the principle of sowing and reaping saying the company was now seeing the effect of the investment and that once the equipment is on the ground its time to be innovative citing Ecocash as an example.
He also said Econet was in this country for the "long haul" (long term) and still has a long way to go given what has happened in other countries like Botswana and South Africa.
He said the company will realise more benefits from the infrastructure "we have put on the ground".
"We have linked Harare-Bulawayo-Beitbridge and Harare-Masvingo-Beitbridge with fibre as we see more potential from data," he added.
Econet has also connected a fibre link from Harare to Chirundu such that calls between Harare and Zambia are now going direct without going via London as was the case previously.
On the operational challenges Mboweni noted the delays in approval of site permits, frequent commercial power outages, delays in payment of interconnect debts and deteriorating access roads to sites adding that the group has had to "do the roads ourselves in order to access certain areas in the rural areas."
He also paid tribute to Potraz especially for coming up with the cost based tariff model.
Giving a strategic overview Mboweni said the group sees value in voice as mobile penetration continues to grow and will now focus on customer retention on high value segments and expanding coverage.
The company will also increase data coverage and capacity and expand product offerings for overlays to include solar, health and mobile money services.
He added that there is a team from head office (EWG) spearheading initiatives and innovations on solar products to make sure that users in rural areas have access to the network.
Econet had 31 "New Generation shops" to enhance customer experience and expanded distribution footprint to over 1 600 outlets and over 1 400 EcoCash agents currently spread across the country.
He lamented the costs of powering base stations as at times 70% of base stations will be on generator power and that involves huge amounts of diesel, fleet of cars and manpower to manage it.
"We are doing something about it and have taken an initiative to equip the base stations to report back to the head office if the diesel is being consumed at a rate above normal...using electronic reporting system via SMS," he said.
Mboweni said because of the widest coverage of the network the group will be introducing location based services as part of overlays.
Market share is over 70% with Telecel coming second at 17% and Net*One with 13% of the market.
The country's mobile penetration rate, which increased to 74% from 66%, has the capacity to go above 100% by 2015 like what has happened in Botswana and South Africa.
Mboweni defended the share buyback saying it's a way of making sure shareholders are given serious returns. During the year the company bought back 6.803 million shares at a cost of $28.5 million.
Commenting on the evolution of network technology Mboweni noted that "we are on the edge of the latest trends" adding that Zimbabwe was rated as number 5 in internet speeds mainly because of investments made by Econet.
Subscribers rose by 16% to 6.4 million from about 1.2 million in 2009 and 5.5 million last year.
"Ecocash has given us a strong conviction that there is no person in Zimbabwe who cannot do without a mobile phone"
He said Econet will be bringing products that are relevant to the citizens of this country and Ecocash is the beginning.
About $700 million was being transmitted to Zimbabwe from South Africa annually and Econet sees a huge opportunity for its MMT services.
Presenting the financials FD Kris Chirairo said the 16% growth in subscribers saw the company registering strong performance with revenues rising 25% to $611 million from $493.5 million previously as a result of strong growth in voice and data revenues, usage and subscriber uptake.
EBITDA was up by 20% to $290.9 million because of the significant growth in operating costs "but we have taken initiatives which we expect to have a positive impact on our EBITDA", Chirairo said.
Profit after-tax 18% up to $165.7 million, up from $141 million in 2011.
The Average Revenue per User (ARPU) increased by 6% to $10,33 from $9,78 while EPS at $1 was 20% up from 83c in 2011.
Chirairo noted that ARPU had started at $17,28 dropped to $9,78 and now at $10,33 and this a result of higher usage as well as addition of new subscribers.
"We will defend our ARPU at not less than $10 going forward," he added.
Voice was the biggest contributor to revenue at 68% while interconnect was down by 2 percentage points to 15% from 17% "because we are seeing more intra calls of Econet to Econet calls," Chirairo added. Other devices remained static at 4%.
Chirairo also noted the company's contribution to national development saying the company had paid a cumulative $414 million in taxes since dollarisation.
Capex cumulative figure at $640 million in the past 3 years had resulted in subscribers increasing to 6.4 million. Total assets grew by 27% to $812.4 million.
Capex to revenue ratio continued to decline to 30% as some of the projects had been completed and we expect the decline to continue.
Debt stood at $249 million while debt to equity ratio improved due to profitability and retirement of debt. Future expansion will be financed largely from internal resources. He also said the group was renegotiating to extend the tenure of facilities and access new lines of credit.
He added that because of the terms and conditions of the $307 million syndicated facility the company saw it prudent not to declare a final dividend.
Giving an outlook Mboweni noted that voice continued to be strong and will continue until "we cover the whole population" and maintain market leadership.
He also said engineers are currently working with suppliers to come up with rural base stations at a fraction of the costs incurred in urban areas.
The company will also be deploying micro base stations in city buildings so that indoor coverage is balanced.
On Data he said the foundation platform has already been set and the fibre is now underground ready to carry more traffic.
On EcoCash he said the company is working on growing mobile money where there will be no need to handle cash and is finalising one of the best advanced platforms that will enable wallet to wallet transactions including banks interface".
Responding to the impact of new players in Data Mboweeni said out of the licensed 11 players there were only 3 serious players "we have seen their traffic and we have not felt challenged."
When asked to give usage numbers of the 1 million EcoCash subscribers and revenue contribution Mboweni said he was not in a position to divulge the figures as they wanted to give the product time to stabilise adding that products of this nature need 24 months to stabilise.
On Ecolife Mboweni said the product remains terminated for now and there are issues in the courts "but whenever there is a need in the market, that need must be met and initiatives will be announced in future".
Source - econet
