Econet share price doubles

HARARE - Share price of Econet Wireless Zimbabwe (Econet), the country’s largest telecommunications firm by subscriber base, has jumped by more than 100 percent since it announced its historic $130 million rights issue in January.

The company’s stock hit a record high of $0,35 cents yesterday compared to $0,17 cents in February this year.

Econet’s shares have also surged by 75 percent year-on-year, from $0,20 in June 2016 and up 111 percent on a quarter-to-date basis, making it one of the biggest movers on the local bourse.

Equities analyst Kudzai Sharara said while many quoted companies’ shares are doing well on the local stock exchange due to a rally that started during the first quarter, Econet was performing exceptionally well.

“Econet is one of the most liquid counters and investors prefer its stocks to other companies,” he said, adding that investors and asset managers were seeking refuge in stocks amid rising inflation concerns.

Sharara noted that other stocks that are performing above expectations include Innscor Africa, SeedCo, Delta, Meikles, Hippo Valley and Colcom among others.

The mobile giant, one of the most capitalised stocks on the Zimbabwe Stock Exchange, successfully mobilised $130 million through a rights offer in the first quarter of the year to pay off its foreign creditors — a development which market experts said augurs well for the company’s future.

The results issue led to the mobile giant’s financial costs going down to $26,73 million for the full year to February from $36,23 million recorded in the same period in 2016.

Econet finance director Roy Chimanikire recently said the rights offer — the largest in Zimbabwe since dollarisation in 2009 — was aimed at addressing the imminent default on loans due to the limited availability of foreign currency.

“We are thankful to the support from our shareholders and all stakeholders, which resulted in the company raising sufficient capital to retire its foreign long-term bank debt. We are now in a stronger position to deal with the challenges of operating in an increasingly more difficult economic environment,” he said.

The mobile network operator posted a $36 million net profit for the year ended February, a slide from $40,2 million in the same period last year on the back of a drop in revenue.

Econet saw its income drop three percent to $622 million which was attributed to the tough economic environment.

The firm, declared a $12,1 million dividend that will see shareholders being paid 0,467 cents per share.

“The strong focus on revenue diversification, stringent cost management as well as developing a corporate culture of disciplined execution and accountability has helped us to limit both a revenue and margin decline, while continuing to maintain our customer-centric focus,” Econet chairperson James Myers said.

Earnings before interest, taxation, depreciation and amortisation also declined in line with the drop in profit after tax to $224 million compared to $238 million in 2016.

In the year, the telecommunications firm cut its capital expenditure to $32,5 million from $82,8 million.

However, the mobile network operator’s subscriber base jumped to 10 268 890 from 10 019 870.

Myers said revenues from voice calls, once a cash cow, continued to decline as consumers switched to cheaper data applications.

He said the data and mobile financial services segment had upped its contribution to group revenue to 32 percent from 14 percent last year.

“This is happening against a backdrop of difficult economic conditions making it harder to generate sufficient capital from the current revenue streams to invest in new businesses of the future,” he said.

Comments (1)

Am pleased and impressed by the way you are contributing to the general economy of the country by assisting your employees as well as the whole nation.Now how can i buy shares in ECONET

TALKMORE MAREZU - 16 July 2018

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