Zimbabwe: Econet Rakes in U.S.$87.9 Million Revenue

Mergers, Acquisitions and Financial Results

Econet Wireless Holdings has raked in a revenue of US$87,9 million since the introduction of the multi-currency system, early this year. In a statement accompanying financial results for the year ended February 28 2009, Econet Wireless said its turnover remained subdued for the first 10 months of the financial year, due to controlled tariffs.

"However, the last two months of January and February recorded an improvement in revenues following the approval of the multi-currency systems." Econet executive director Douglas Mboweni said the company had secured the funding to double its capacity. "Through our parent company, Econet Wireless Group (EWG), will expand its capacity, from the current 2,5 million subscribers to 5 million subscribers."

Currently, Econet has a connected capacity of about 1.2 million and expects that number to exceed two million by the end of this year. He said that at the beginning of the year, group chairman Strive Masiyiwa had put in place a task force to mobilise resources for the expansion of the Zimbabwe network. The task force comprises executives from the head office, as well as the local company.

Mboweni said the team which has travelled around the world has had "spectacular success", and they are now turning away some funders, as they now want to focus on implementing what they have. The company said the network rollout in Matabeleland and Bulawayo was successfully implemented after the commissioning of new equipment.

A launch of data services was implemented and the company is now at advanced stage of rolling out the 3G services. The group performed a revaluation of its property, plant and equipment in order to reflect a fair value of the business assets.

On its general outlook, the introduction of the use of multiple currencies in the economy, coupled with the pegging on tariffs in real terms, the stability of prices and the drive to expand the network have made the prospects for the group brighter.

The company re-valued its assets in US dollars, showing the growth of its balance sheet to have increased to US$176,4 million. However the revaluation in the assets resulted in a depreciation charge of $18,4 million, which contributed significantly to a net loss of US$2,1 million for the year. Management was not unduly concerned with this number, given the turmoil in the first 10 months of trading.

Services that had been suspended have all been restored, and new ones have been introduced. The company undertook a major study of salaries in the region of cell phone operators, and is now paying its staff based on that study, as a result the haemorrhaging of staff to other countries has stopped, and many are now coming back to rejoin. Obsolete systems and equipment are being updated, even as the expansion is taking place.

Mboweni said whilst the process of mobilising funds, placing orders with suppliers for equipment, as well as local construction, created a lead time on delivery of new capacity, the company has now begun to release capacity for pre-paid lines. In the last two months, the company has been selling about 5,000 new lines per day, and expects this to increase as more equipment is received and installed.

The Herald