Econet Wireless Zimbabwe Limited posted an impressive set of full year financial results for the year to February 28, 2018, with after tax profit vaulting 265 percent to $132 million, driven by the firm’s aggressive pursuit of non-traditional telco products.
The company reported $831,6 million revenue for the year, a 34 percent increase from the $621,7 million reported in the prior year, with a significant 57,3 percent of total revenue coming from its fintech, technology and data services.
The company’s Earnings Before Interest Tax Depreciation and Amortisation rose by 51 percent to $340,8 million, up from $ 224 million the previous year, whileprofit after tax (PAT) more than doubled to $132,3 million, from $36,2 million in the previous year.
The strong PAT performance came on the back of bold cost management measures, which saw the company’s cost contributions holding steady at 62,4 percent of turnover, down from 65,5 percent in the prior year, and its debt to equity ratio coming at a healthy 7,7 percent, down from 18,3 percent in the previous year, and 33,7 percent in 2016.
The results showed that while capital expenditure went up from $ 32,4 million to $101,9 million — demonstrating the listed company’s continuous reinvestment in its business infrastructure and systems — cash flow from operations rose by 123 percent, from $246 million in the prior year, to $549 million, propelled by all-round growth in the company’s revenue buckets, including voice.
The company also benefited from the addition of more than a million new customers, as the company reported an increase in subscribers to 11,4 million, from 10,3 million in the previous year.
Along with subscriber growth, Econet reported a jump in Average Revenue Per User (ARPU) of $9,7 per customer, up from $7,3 per customer in the prior year.
The raise in the key ARPU metric shows that although Econet did not increase its price (the company operates in a regulated industry), it was able to grow its customer base and at the same time increase the value contribution of each customer, owing to its broad product portfolio as a result its foray into non-traditional services.
The results show that Econet’s overall revenue performance was lifted by its solid fintech (EcoCash, EcoSure, EcoFarmer and similar services) as well as data revenue contributions. The fintech revenue rose by 120 percent to $244,7 million, up from $111,1 million at the end of February 2017, with EcoCash subscribers increasing to 8 million, from 6,7 million in the prior year.
The company’s data services posted continued growth in revenue contribution, customer usage (data traffic) and in new subscribers, on the back of latent demand from new use cases, increased data coverage and growing smart phone penetration.
Data revenue grew by 18,1 percent to $122,6 million, from $144,8 million the previous year, while data customers increased from 6,1 million to 7,2 million at the end of the year under review.
Speaking at the announcement of the results, Econet Wireless Zimbabwe chief executive Mr Douglas Mboweni said the results, coming at a time Econet is celebrating its licensing 20 years ago; bore testimony to the robustness and resilience of the company’s business model.
“The last 20 years have been remarkable as we have seen our business evolve from being just a telecom to a becoming a full TMT (telecom, media and technology) player transforming the lives of Zimbabweans in a deep and meaningful way through a wide array of services,” Mr Mboweni said.
“The results you see today affirm the robustness and flexibility of our business model based on our passion to offer solutions that meet people’s needs” he said, adding that the company would continue delivering financial and economic inclusion to the general public, and to facilitate the ease of doing business through its wide range of products.
“We have diversified our product portfolios to ensure we provide services in the financial services sector, in agriculture, in education, insurance and many other areas that touch people’s lives and meet their needs,” Mr Mboweni said.
He reaffirmed Econet’s desire to contribute to the national economy by offering to the mass market services previously only accessible to the privileged few, because the company believed in “going where the need is” and in targeting “the value at the bottom of the pyramid”.
The company’s finance director, Mr Roy Chimanikire, said the results showed that Econet’s new business model was robust and that the company’s disciplined cost optimization and debt management strategies were paying off.
“Our results, showing a 57,3 percent revenue contribution from non-voice products, are a clear validation of the great foresight our board and management have had in remodelling the company’s strategy and making it ‘future proof’ by shifting from only offering traditional telco services, to aggressively innovating to offer new revenue streams from non-voice products and services ,” said Mr Chimanikire.
He paid tribute to the dedication and excellence in execution of Econet staff, which he said had shown exceptional diligence in successfully implementing bold and at times sacrificial cost-containment measures in 2015, which created the platform from which the company achieved its impressive results.
Mr Chimanikire also attributed of the company’s current success to “the quiet, digital and mobile financial inclusion revolution” which the company had started with EcoCash, which he said had now become a ubiquitous payment service in Zimbabwe, and had received numerous global awards as the best mobile money platform in the world.