Econet revenue slides on weak voice, SMS

MOBILE telecommunications firm Econet Wireless Zimbabwe's revenue for the year ended February 29, 2016 slid to $641 million, down14,1 percent from $746, 2 million in the prior comparable period as voice and SMS revenues continued to underperform.

CEO Douglas Mboweni said the company had long anticipated the decline in voice and SMS revenue, and the mobile telecoms operator was basing future revenue growth on existing and anticipated data products.

"The local telecom industry in line with global trends is experiencing a decline in voice revenues. We long saw this trend and over the years we've invested in our infrastructure and created an innovation pipeline to create new revenue streams.

"In a shrinking industry we've maintained market dominance getting 70 percent of the value share while aggressively growing our broadband and mobile financial services. Through our robust business model we're overcoming disruptive technology cycles and strong economic headwinds," he said.

He said the declining voice revenues will be eased by incentives and packages that suit declining disposable incomes and growing our broadband through wider 4G/ LTE coverage, offering affordable smartphones and rolling broadband to the home.

Econet's profit-after-tax stood at $40,2 million impacted by high depreciation amounting to $136, 8 million.

Earnings before interest, taxes, depreciation and amortisation (EBIDTA) was $238,4 million down from $285,6 million which was 16,5 percent.

Commenting on the financials yesterday afternoon, finance director Roy Chimanikire said: "These results reflect the impact of the regulatory  tariff reductions as well as a cocktail of taxes and levies, which include 5 percent excise duty and the increase in Universal Services Fund (USF) levy.

''This has effectively reduced our tariffs while directly increasing our costs through additional tax burden. Through an aggressive cost optimisation programme we're ensuring that we protect the bottom line."

During the period under review, Econet recorded subscriber growth of 9 percent from 9,2 million last year to the current 10 million. This growth was in spite of the over 1 million subscribers who were  deregistered in compliance with regulatory requirements for proper registration.

Management said revenue lost from the de-registered subscribers amounted to $2 million and the cost to re-connect these subscribers came to $500,000.

Mboweni said EcoCash has become the largest mobile banking and money transfer service in Zimbabwe, and one of the largest in the region.

As of year-end, EcoCash had 5,8 million registered users and had moved $6, 6 billion through money transfer, both within Zimbabwe and from Zimbabweans remitting money from outside the country.

Other services such as EcoSure and EcoFarmer had also registered growth during the period under review. For  example, he said EcoSure has covered over 1 million lives during the course of this year while EcoFarmer now had 900,000 clients.

"We see great potential in these two services and we've exciting plans for them in the coming months," he said.

Going forward, the company said it will continue to invest in infrastructure and has an extensive innovation pipeline as Zimbabwe's largest telecommunications company continues to diversify revenue streams away from the traditional sources of voice and SMS.

"The company's resilience through continued investment in infrastructure and introduction of innovative products was also key to surviving and growing in what's increasingly becoming a volatile and complex economic environment. We are also focusing on cost optimisation to protect revenues," said the CEO. – BH24