Econet cuts staff salaries by 35%

ECONET Wireless, Zimbabwe's largest mobile phone company, is cutting salaries by 35 percent across the board starting in July. The cuts will also be felt at Econet's subsidiaries, Steward Bank, Mutare Bottling and Liquid Telecom.

Several sources last night told The Chronicle that Econet's 1,000 plus staff were told of the impending cuts early this month.

The company's revenues took a heavy knock when telecommunications regulator, POTRAZ, ordered all telecoms firms to slash tariffs in October last year.

Econet fought the tariffs cuts in the courts, but its case was dismissed by the Supreme Court in March this year

For the year ended February 2015, Econet released annual results showing a staggering 41 percent dip in profits from 2013.

Now the company, which was founded by Strive Masiyiwa and started operating in 1998, is passing the pain to its workers.

A senior company executive said: "The tariff cuts coupled with a depressed economy and huge capital investments already underway have made this course of action unavoidable. The other option would have been job cuts, but we decided that can only be the last resort.

"The reality is our staff costs are too high, compared to our revenues. Some corrective action had to be taken, and the options in that situation are never palatable."

Workers are furious that the company gave them just a month's notice.

"We've not had a salary increase since 2009. The perception people have out there is that Econet pays the best salaries. The truth is Econet rewards its top executives really well, but the rest of the staff's remuneration is quite shameful. Our salaries don't compare to what NetOne and Telecel are paying, for instance," one engineer said.

A call centre employee added: "We've known for weeks that our pay is going to be cut, but nothing really prepares you for it. The other issue really troubling workers is that the 35 percent cut is across the board, most workers would have preferred a sliding scale approach. Imagine a cleaner already earning peanuts having his pay cut by almost half.

"The top executives are already better off and it would've made sense for them to give up their mega salaries."

Econet Chief Executive Officer Douglas Mboweni was not immediately reachable for comment.

Steward Bank CEO Lance Mambondiani referred all questions to Econet's corporate communications manager Ranga Mberi who was also not reachable last night.

However, when Econet reported a 41 percent decline in after-tax profits, the company blamed the voice tariff cut and taxes on airtime and mobile handsets for the reduced revenues.

It also said NetOne and TelOne's failure to settle interconnection debts, that reached $26,3 million in the year under review, threatened the viability of the telecommunications sector.

"The introduction of a 5 percent excise duty on airtime sales, a 25 percent duty on handsets, and a 5 cents levy per transaction on mobile money transfers, compounded by a 35 percent voice tariff reduction has negatively affected the viability of the telecommunication sector, which has hitherto been a mainstay of investment, economic vitality, and employment creation in our country," Econet said.

"The company has had to cut capital expenditure, and stop further employment creation for the first time since it began operations. Econet is one of the largest employers in the country, both directly and indirectly, and is concerned about the job losses that now looks inevitable."