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Econet posts good H1 results, contributes billions to the fiscus through taxes and levies

23 November 2023

Econet Wireless Zimbabwe, the country’s leading telecommunications and technology firm, has released its half year results toAugust 31, 2023 in which the company reported an 186% growth in revenue to ZWL$1.1 trillion, with ZWL$400 billion (nearly 40%) of that amount going to statutory payments in the form of taxes and levies. The company’s statutory payments, which are a 246% increase from the $114 billion it paid in the corresponding period last year, is more than 10% of the country’s projected $3.9 trillion revenue collections in the 2023 National Budget.

The company’s revenue performance can be attributed to a 24% volume increase in voice traffic and a 25% volume increase in data traffic.

The company said despite operating in a challenging hyperinflationary environment, it demonstrated resilience and adaptability by leveraging strategic partnerships with its major equipment vendors to modernise its network after several years of under-investment.

“From an investment level of less than 5% of revenue in previous years, capital investments for the period rose to 24% of revenue, in the period under review,” said Econet’s board chairman Dr James Myers.

“As a result, we modernised 252 base station sites in the first quarter, and 439 base station sites in the second quarter, covering Harare and Bulawayo.”

The network modernisation initiative involves replacing old equipment that has limited capacity or is no longer supported by thesuppliers. To continue its network upgrade, Econet is seeking foreign currency to buy new equipment which offers superior performance, increased capacity, and expanded coverage.

Dr Myers noted that the listed telecommunication company is committed to supporting the growing demand for digital services in line with global trends in the telecommunications sector. The company is embracing cloud adoption and artificial intelligence while ensuring customer safety through robust cybersecurity solutions.

“We recognise that digital services and next-generation connectivity have become increasingly central to our livelihoods,” said Dr Myers. “This realisation drives our imperative to accelerate digital inclusion.”

Meanwhile, Dr Myers noted that viable pricing of telecommunication services remains a key factor for the continued growth andsustainability of the industry, whose capital expenditure requires foreign currency.

“The volatile operating environment continues to significantly erode the benefits of any tariff adjustments. Regular and effective tariff reviews that track inflation and exchange rate movements are critical to ensure the viability and sustainability of thesector,” he said.

He noted that according to the Postal and Regulatory Telecommunications Authority of Zimbabwe (POTRAZ), voice and data tariffs remain at discounts of 58% and 88% respectively to the region.
Dr Myers said in light of the ongoing capital expenditure program of the group, the directors resolved not to declare an interim dividend for the half year.

In the period under review Econet shareholders duly approved the rights offer scheme to raise US$30.3 million in fresh equity to redeem US dollar denominated debentures that matured at the end of April 2023.

“Through our implementing partner, Higherlife Foundation, the group continues to undertake several initiatives aimed at making a positive impact within the communities in which we operate,” he said.

“During the period under review, we embarked on a recruitment exercise that awarded more than 5,300 scholarships toorphaned and vulnerable children. In total, more than 11,100 students are benefiting from various scholarships under the Higherlife Foundation. Our digital platform, Akello, continued to provide quality education to children in vulnerable communities which saw more than 34,600 students accessing the platform through Akello tech scholarships.”