Econet Wireless Zimbabwe Limited (ECO.zw) 2019 Annual Report

We have extracted the Chief Executive Officer’s Statement from the 2019 annual report for Econet Wireless Zimbabwe Limited (ECO.zw), listed on the Zimbabwe Stock Exchange:

Chief Executive Officer’s Operations Review

INTRODUCTION

Econet continues to demonstrate agility to sustain shareholder value through delivering high-quality digital services, innovative transformation to doing business and sustained contribution to society. The demerger of Cassava Smartech from Econet Wireless showed our prowess and commitment to transform the business as a reliable digital services company ready to pioneer new advancements in the Telecommunications, Media and Technology space. The growth in revenues from continuing operations of 41% compared to the previous financial year, positions the business as a resilient market leader with increased customer trust and a value driven counter.

OPERATIONS OVERVIEW

Liquid Telecom Zimbabwe (LTZ) Disposal
The Company exchanged its 51% stake in Liquid Telecom Zimbabwe for a stake of equivalent value in Liquid Telecommunications Holdings. This was an opportunity to acquire a strategic interest in Africa’s largest open access cross-border fibre operator. The investment is currently held at USD 135 million and holds prospects for dividends and capital appreciation in foreign currency.

Cassava Demerger
The Company’s financial technology business demerged from the mobile network operations business, and listed separately on the Zimbabwe Stock Exchange on 18 December 2018 as Cassava Smartech Zimbabwe Limited (CSZL). CSZL is now the new holding company for EcoCash, EcoSure, Econet Insurance, Steward Bank and Steward Health. Econet Wireless retained ownership of 20% of CSZL, a shareholding which is worth more than ZWL 1.14 billion as at February 2019.

The financial year under review saw Econet introducing new innovations into the market to further consolidate its position as a leader in digital services targeting different industry verticals.

As an established Telecommunications, Media and Technology (TMT) player, Econet introduced pioneering technologies in the youth segment of the market that have been widely adopted and made Zimbabwe one of the leading countries in digital technology services.

TELECOMMUNICATIONS

The business introduced personalised offers to customers through advanced data warehousing and business intelligence systems for Broadband, Voice and SMS. Demand for the traditional services grew leading to 37% traffic growth in Voice, 80% Data traffic and 57% SMS traffic. The third quarter saw Econet introducing the YoMix App an exciting product through Elevate, which has since been expanded to include all customers on the network. To over 100 thousand customers downloaded the service. It is a flexible value package that empowers customers to design customised bundles of voice, data, SMS, media and other value added services to suit their own needs and is a first in Zimbabwe.

MEDIA

Econet continued to drive the ‘Tv everywhere’ revolution through multi-platform and multi-channel offerings such as content provision and streaming services. The business expanded its service offering in the broadband space by increasing use cases for data in line with the digital transformation drive. The timeous introduction of Kwese iflix with the 2018 FIFA World Cup soccer tournament resulted in over 2 million downloads of the app and a cumulative revenue of ZWL 4.6 million.

TECHNOLOGY

The surge in creating value and opportunity in disruptive  technologies such as artificial intelligence and IOT saw the business introducing Business Process Outsourcing (BPO) Omni-Contact, Enterprise Business, Connected Services, Gaming and Music and Entertainment.

In the overlay services, Econet introduced Comedy Box under Music and Entertainment a service which offers local and international stand-up comedy and jokes. The music and infotainment segment contributed ZWL 7.5 million in revenue and a total customer base of over 600 thousand. Under EcoGames, the business introduced Play for Free trivia that contributed ZWL 1.7 million revenue in the first half. In the second half Spin and Win was introduced earning a revenue of ZWL 1.2 million. Both initiatives were well received in the market resulting in 800 thousand customers. The EcoAds business was boosted by the introduction of Bulk Messaging Advertising portal which saw revenues climb to ZWL 5 million in the financial year.

Econet continues to focus on improving its customer experience and as a way to reduce waiting time for viewing customer service, the business introduced My Web Self Care. This is a portal which Econet customers are able to access on the go to check their usage and resolve service queries on their own. The web self care service innovation has really brought convenience and so much transparency on the usage of voice and data airtime. The year also saw our Contact Centre being transformed into a revenue generating entity despite the economic challenges that were at play. It is now offering its services to businesses locally, regionally and internationally under the flagship OmniContact.

SOCIAL RESPONSIBILITY

Sustainability is firmly embedded in the Econet strategy. Rapid technological advances and digital transformation are changing the way societies, communities and businesses operate. These developments and stakeholder interests informs Econet on the formulation of the sustainability strategy. We have therefore anchored our strategy around a clear purpose of enriching customer’s lives through technology and connectivity. During the year we escalated the process of tracking our sustainability key performance indicators across all our business themes. These sustainability themes align with the Sustainable Development Goals (SDGs) that the Company contributes to.

FINANCIAL REVIEW

Consolidated Performance
Total revenue for the year under review was ZWL 1 .1 billion. The growth was spurred by an increase in the demand for and utilisation of most of our products and services. Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) closed the year at 45% despite inflationary pressures affecting the economy. In spite of this performance, the unpredictable deterioration in the ZWL interbank rate and the inability to adjust tariffs is creating severe pressure on our financial ratios.

MNO Continuing Operations
Revenue for continuing operations was ZWL 808.7 million for the year. Voice and data performance remained the anchor products for the business. The Mobile Network Operations (MNO) business accounted for 95% of total revenue from continuing operations. In prior year before the unbundling, the MNO revenue contribution was 67%.

OUTLOOK

Traditional connectivity and data services will continue to be an integral part of the market and our business. In addition, the business will continue to combine technology with business strategy and business re-modelling to drive cutting edge innovation, agility, efficiency and growth in tandem with digital transformation. With this, the business will focus on introducing new offers in the gaming and entertainment area. As we introduce more services, partnerships with locals will be crucial in content creation for the services. This will bring value to the business and to our stakeholders.

Mr D. Mboweni
CHIEF EXECUTIVE OFFICER

Related download
ECONET | 2019 Annual report.pdf