Econet announces stellar half-year results buoyed by impressive SmarTech performance

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Business Writer 
Econet Wireless Zimbabwe Limited (EWZL) half year revenue to August this year rose by nearly 70 percent on the back of strong performance by its ‘SmartTech business unit.

Revenue grew to $600 million, up from $ 353 million prior year, the company said in its financial year yesterday.

The conglomerate, which is well on its way to becoming the country’s first listed billion-dollar revenue business, posted an impressive $122 million profit after tax in the same period, a 265 percent jump from the $49 million reported in the same period last year.

The blue-chip company’s 70 percent increase in overall revenue was boosted by its $248 million SmarTech revenue growth, which jumped by 145 percent from $101 million in the same period last year.

MNO (or telco) revenue from data, voice and SMS grew by 40 percent to $353 million, up from $252 million in results that management credited to its TMT (telecom, media and technology) model and that it ascribed to EWZL’s ability to sweat all its assets – both MNO and SmarTech.

This was borne out by the fact that EWZL’s traditional telco products bucked the industry trend and all showed double digit growth, with data revenue contribution growing by 57 percent to $98.3 million and the voice and SMS revenue going up by 34 percent to $218 million.

The results, announced at an analyst briefing in Harare on Thursday, showed the company achieved a half-year EBITDA of $252 million, 82 percent more than the $139 million reported in August 2017, and a reduced capital expenditure of $20 million, nearly a third of what it spent in the same period last year.

Now the largest listed company on the Zimbabwe Stock Exchange (ZSE) by market capitalization, the firm reported a 181 percent surge in earnings per share (EPS) of 6.0 cents, from 2.1 cents in August 2017.

The half-year results come at a time EWZL has published a Circular to Shareholders announcing plans to separately list its SmarTech assets on the ZSE. In the Chairman’s statement, released with the results, the company said the de-merged entities will operate separately but remain interdependent while pursuing the group’s proven TMT multi-sectoral model.

Speaking at the presentation of the results, EWZL CEO Mr Douglas Mboweni, said Econet had built a solid business case based on a unique TMT model to create future-proof, stakeholder value.

“Through relentless innovation and the ability to leverage technology to meet consumer needs, the company has successfully created a digital ecosystem through which its MNO and SmarTech assets create customer value in diverse industries and market segments, which include mobile financial services, insurance, transport and logistics, education, heath, and many others,” Mr Mboweni said, adding that the Cassava SmarTech spin off would unlock significant shareholder value, because, “the sum of the parts are always greater than the whole”.

Speaking at the analysts briefing, Cassava CEO Mr Eddie Chibi, said the results demonstrated the evident potential and growth prospects that lie within the technology-driven smartech brands, saying Cassava would work to empower people and use innovation to take stakeholder value-creation to a whole new level.

“We will focus on using innovative and inclusive digital solutions to create shareholder and customer value, even as we drive socio-economic development and improve the overall quality of life for all Zimbabweans,” Mr Chibi said.

He said Cassava would leverage big data and the group’s digital ecosystem to exploit opportunities for the company’s FinTech, InsureTech, AgricTech, EduTech, HealthTech, E-Commerce, On-Demand Services, Media and Social Payments business units.

Presenting the numbers, EWZL Finance Director Mr Roy Chimanikire, attributed the company’s solid triple digit growth to the strategic decisions it made to diversify, grow and invest in new revenue streams while successfully managing to grow traditional revenue streams such as voice and SMS through a strong customer focus.

He said apart from the demonstrated and evident growth potential from the SmarTech business, the future for the MNO lay in mass consumption of data and multimedia content. He added that Econet was in a good place to leverage future growth because it had invested in some quality assets. Econet has 70 percent data traffic market share and over 90 percent population coverage of data services through its investment in 3G and LTE (4G) infrastructure.

Mr Chimanikire remarked that in the future, the Econet telco and Cassava SmarTech business performances would be reported separately as the businesses will now be separately listed.

“With Cassava now about 70 percent the size of the (Econet) MNO, and with EcoCash now the de facto payment platform in this market, our business will continue to provide even greater value for our stakeholders going forward,” he said, stressing the economic contribution Econet had made to the nation over the past 20 years.

“We have created value for all our shareholders, customers and other stakeholders, including our supply chain partners, our dealers and the small businesses who have partnered with us in delivering products such as EcoCash, and now Vaya.

“The Company has paid over $1.7 billion in statutory payments to the Government since 2009.,” Mr Chimanikire said, before announcing a $30-million dividend to shareholders.

The company took the opportunity to announce other proposed transactions it seeks to push through to its shareholders, over and above the demerger of Cassava SmarTech from the MNO business.

These are the conversion to equity of debentures that were issued as part of the Company’s Rights Offer in March 2017, and the exchange of the Company’s 51 percent stake in Liquid Telecom Zimbabwe for a stake of equivalent value in the holding company, Liquid Telecom Holdings, in advance of the anticipated listing of Liquid Telecom Holdings on a reputable international exchange.

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