Econet suffers $1 billion loss

Harare, (New Ziana) – Mobile telecommunications giant, Econet Zimbabwe slumped to a loss of nearly $1 billion for the half-year ended August 2019, hit hard by exchange losses following the de-coupling of the fixed 1-1 Zimbabwe dollar/greenback exchange rate earlier this year.

In the period, the company suffered exchange losses of a staggering $1.9 billion, accounting for the bulk of the losses.

In comparison, although this does not make much sense because of the exchange rate liberalisation, Econet Zimbabwe made a profit of $123.6 million in the same period last year.

Group chairman, James Myers said the company’s foreign currency-based obligations became heavier after the exchange liberalisation and subsequent steep depreciation of the local currency in the period.

“The group’s results for the period under review were significantly weighed down by the accelerated depreciation of the local currency,” he said.

“As a result of outstanding foreign currency obligations, the group recorded foreign exchange losses of $1.9 billion.”

Zimbabwe’s currency depreciated from a fixed rate of 1:1 to the United States dollar early this year to the current rate of 1:16.7.

Group revenue increased to $836.4 million from $600.3 million, but Myers said prevailing tariffs lagged behind inflation, and were therefore impacting on the company’s bottom line.

“Voice, SMS and data tariffs charged in Zimbabwe are now amongst the lowest in Africa,” he said.

“This is at a time when the country is experiencing up to 18 hours of power outages and our network is running almost exclusively on diesel generators, a situation which is clearly untenable.”

Myers said Econet had since connected its core sites and switching centres to a solar grid to keep the network running in the wake of power shortages.

Lack of access to foreign currency for network upgrades also remained a key obstacle.

The group did not declare a dividend for the period.

Earnings before interest, taxation, depreciation and amortisation more than doubled to $360.8 million from $111.6 million in the comparative period.

Shareholders suffered a basic loss per share of 38 cents, down from a profit of 5.2 cents per share last year.

Despite the challenges, Econet continued to enjoy a lion’s share of the industry overall market share in terms of both voice and data, at 80 percent and 72 percent respectively.

The number of its subscribers was up 10 percent to 12.6 million.

Myers said the business was resilient and would withstand the economic headwinds in the outlook period.

“We are confident that we have put in place the structures and processes that will allow us to quickly adapt to the changes in our environment,” he said.
New Ziana