eBusiness Weekly
Enacy Mapakame
Shares of Econet have shot 24,2 percent in a week of frenzied buying, spurred by expectations of strong full-year earnings. The stock soared to 86 cents on April 17 from 70 cents a week earlier. It rose as much as 7,3 percent in a day earlier this week, narrowing its year to date loss to 5,6 percent. Econet is expected to release its full-year to February 28, 2018 earnings anytime from now.
Analysts have guided net income to come in at $106 million, up 180 percent from $37 million achieved a year ago. Revenue is seen climbing 14 percent to $711 million for the year.
The growth for the telecoms will be expected across all segments. Indications are that growth in the telecoms sector will be driven by data, voice and short message services (SMS) on the back of better tariff management and customer segmentation.
Although voice revenue has been on the decline of recent, the rate of decline has slowed down as at end of 2017, according to regulator Postal and Telecommunications Regulatory Authority (POTRAZ).
POTRAZ also sees further growth in sector revenue in 2018 driven mainly by data and internet services. Mobile money is also expected to boost total mobile revenues due to the cash shortages and increase in use of mobile money transactions.
According to POTRAZ, total telecommunications revenue for the year 2017 increased by 11, 2 to record $1,109,899,246 from $998,094,747 recorded in 2016.
The growth in sector revenue was attributed to the upsurge in the consumption of data and internet in the country, a trend that is expected to continue this year and going forward.
For Econet, which has maintained its position as the country’s largest mobile operator by subscribers, the recent launch of Kwese TV, a multi- platform content offering, the use of the group’s broadband network for distribution of this service (through distributed hash table) is expected to drive growth in the data segment.
In 2017, Econet continued to dominate the market with a market share of 53,1 percent at the end of the year. Its market share increased by 3,7 percent in line with the 17,7 percent growth in active subscriptions which should work in the firm’s favour going forward.
The telecoms firm is also expected to cash in on the recent enhanced capacity at its banking unit, Steward Bank and mobile money arm, EcoCash.
Analysts say this should help improve efficiencies in the fintech segment, which is expected to continue benefiting from the cash shortages.
EcoCash last year launched the swipe into EcoCash service enabling subscribers to swipe funds from bank accounts directly into wallets.
Econet is one of the Zimbabwe Stock Exchange-listed firms expected to remain highly cash generative, and the significant resources are anticipated to maintain its dividend policy aggressive making it an attractive stock.
Last year, the firm maintained a strong dividend policy rewarding its shareholders. However, Econet’s downside risk still comes from operating in uncertain economic environment marred with foreign currency shortages.
