Econet secures $500m loan facility

HARARE - Diversified telecommunications group, Econet Global, has secured a $500 million loan facility from China Development Bank and ZTE, with the firm’s Zimbabwe unit set to get at least $300 million for its expansion programme.

The loan agreement was announced in South Africa this week during Chinese President Xi Jinping’s visit.

Econet Wireless Zimbabwe chief executive Douglas Mboweni said the loan facility, negotiated at group level, would help the local telecommunication giant consolidate its market position and also introduce new services.

Having already invested more than $1,2 billion in developing its network, Econet — the only privately-owned operator in the country, said it will continue to invest heavily in further expanding its services.

“With this facility we will take our investment to well over $1,5 billion. This shows our commitment to our country,” Mboweni said.

The Econet boss added that the deal was negotiated at group level where there is adequate expertise to raise the huge investment funds.

“At our group level, they have developed a lot of expertise to raise large amounts of money when we need it. It is one of our competitive advantages,” he said.

The latest development come as Econet, which recently released its interim results for the six months to August 2015 that reflected a drop in revenues and profits, indicated that its strategy of reducing the company’s dependence on declining voice revenues was steadily showing progress.

Mboweni said Econet was the first telecommunications company to take pre-emptive strategies in anticipation of the reduction in revenue from voice calls by launching an array of overlay services that are over time expected to become significant contributors to revenue.

Commenting on the financial results, Mboweni cited the challenging operating environment, the regulatory directive on tariffs and increased taxation in the form of excise duty and handset duties as having had a significant negative impact on revenues during the period under review.

Revenue in the six months to August 2015 fell by 17,6 percent compared with the same comparative period last year, although the EBIDTA margin of 38 percent is comparable to other regional telecommunication businesses.

However, Mboweni said he was happy with the increase in the contribution to revenue from the Overlay Services, which accounted for 11 percent to the top line compared with seven percent in the previous period.

Econet has a unique position in the market in that it is the only operator has the widest offering of diversified products and services across different industry sectors.

“This is a global telecommunication industry wide phenomenon. We therefore took a position to diversify our revenue streams leveraging on our robust infrastructure.

Today we have a technology bank, mobile financial services, an insurance business and most recently we have added a bouquet of connected lifestyle products,” Mboweni said.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.