• Voice volumes increased by 19%

  • Data volumes increased by 58%

    Harare - Telecommunications giant, Econet Wireless Zimbabwe says it incurred an exchange loss of about ZW$13.4 billion when the official rate was devalued from ZW$124 to the US$ to ZW$338, a depreciation of 172% which eroded the gains it made in the year ended 28 February 2022.

    In a statement accompanying the Company's financial results for the year ended 28 February 2022, Chairman James Myers said, during the year, the Central Bank exchange rate to the US$ moved from ZW$84 to ZW$124, a depreciation of 48%.

    This resulted in exchange losses arising from foreign currency denominated obligations decreasing from ZW$22.8 billion to ZW$5.1 billion, resulting in an incremental profit of ZW$17.7 billion for the Company, however, immediately following the end of the financial year, the official rate experienced a drastic loss which ate into the Company’s realised profits.

    “The Company is highly susceptible to exchange rate movements because it imports equipment and software for operating purposes, which means that any exchange rate depreciation significantly impacts its ability to invest in new equipment,” Myer said.

    Meanwhile, the Company recorded volume increases in data and voice of 58% and 19% respectively, reflecting the increased demand from its customers.

    Earnings before interest, taxation, depreciation and amortisation (EBITDA) margin for the year marginally firmed to close the year at 52% against a prior comparative of 51% anchored by stringent cost alignment measures and close monitoring of the business’ cost structure.

    Concerning investment and capacity, Econet’s investment in infrastructure over the years has been on a downward trend due to acute foreign currency shortages in the country.

    Zimbabwe has been experiencing acute foreign currency shortages for years as demand for foreign currency has continued upward from companies and individuals, worsening the situation.

    “The business has been investing an average of 5% of revenue compared to other telecommunication peers in the region whose average annual capital investment is over 15% of revenue. This continues to have an adverse effect on the customer experience,” Myer said.

    During the year, in inflation-adjusted terms, Econet contributed to the fiscus more than ZW$31.1 billion through various statutory payments, a 53% increase from the ZW$20.3 billion paid in the prior year.

    “Statutory payments comprise 142% (prior year 804%) of profit before tax,” Myer said.

    The Company did not declare a dividend during the period under review as Directors continue to assess the economic environment.

    Going forward, the Company remains committed to maintaining its position as a digital service provider and will continue to invest in infrastructure and capacity enhancements to meet needs and expectations.

    “Investment in network upgrades and increased 5G coverage will be at the core of our digital transformation journey,” Myer said.

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