Zimbabwe's Econet Wireless has secured the funding to expand its
capacity from 2.5 million to 5 million by the end of next year, CEO
Douglas Mboweni has said. Making the announcement at the company's
annual results presentation, Mr. Mboweni said: "I am pleased to
announce that we have secured the resources, through our parent
company, Econet Wireless Group (EWG), to expand capacity further, from
the current 2,5m expansion program, to go to 5 million."
Currently, Econet has a connected capacity of about 1.2 million and
expects that number to exceed two million by the end of this year.
He said that at the beginning of the year, group chairman Mr. Strive
Masiyiwa had put in place a task force to mobilise resources for the
expansion of the Zimbabwe network. The task force comprises executives
from the head office, as well as the local company. Mr Mboweni said
the team which has traveled around the world has had "spectacular
success", and they are now turning away some funders, as they now want
to focus on implementing what they have.
Meanwhile, at the results presentation, Mr Mboweni said Econet has
returned to its core business of telecommunications, following the
dollarisation and the end of sub-economical tariffs. "As you all know,
the hyperinflation caused us to focus on investment activities in
order to keep the business alive, but now we are back to our core
business," he said.
Whilst this time last year Econet Wireless' income came almost
exclusively from investments, the income statement this year has
almost no investment income. The revenue for the year was $87.9
million, and the earnings before interest, depreciation, tax, and
armortisation was $26.6 million, or 30% of revenue.
The company re-valued its assets in US dollars, showing the growth of
its balance sheet to have increased to $176.4 million. However the
revaluation in the assets resulted in a depreciation charge of $18.4
million, which contributed significantly to a net loss of $2.1 million
for the year. Management was not unduly concerned with this number,
given the turmoil in the first 10 months of trading. Finance Director,
Mr Kris Chirairo, said it was clear that Econet was one of the first
large companies to fully dollarize, adding that the company was now
"doing very well" as would be shown in the half year figures, which
would be based on fully dollarized earnings. "It is difficult to
imagine there is a stronger public company out there than Econet
Wireless at the moment. We are operating at full capacity, and
expanding rapidly. Our revenues are strong and growing, and cash flow
is very good."
Both Mr Mboweni and Chirairo stressed that there had been a "lot of
cleaning up" during the first few months post-dollarisation. The
company has paid foreign creditors, and restored normal supply and
contractor relationships which had been impaired by lack of access to
foreign exchange. Services that had been suspended have all been
restored, and new ones have been introduced. The company undertook a
major study of salaries in the region of cell phone operators, and is
now paying its staff based on that study, as a result the hemorrhaging
of staff to other countries has stopped, and many are now coming back
to rejoin. Obsolete systems and equipment are being updated, even as
the expansion is taking place.
Mr Chirairo said the use of multiple currencies and the collapse of
the Zimbabwe dollar had essentially made the accounting process for
the first 10 months of the trading year an "academic exercise". He
said what was important to the company is what had happened in the
last two months when dollar tariffs were introduced.
Those two months contributed almost 32% of the total revenue realized,
despite the early challenges of implementing a new USD distribution
system for its products, which had been hampered by the requirement
for licensing of dealers to receive payment in US dollars.
Mr Chirairo said that beyond the two months, revenue continued to
grow, but would not state the actual numbers, saying such information
would be made available at the half year results in August.
Mr Mboweni said whilst the process of mobilizing funds, placing orders
with suppliers for equipment, as well as local construction, created a
lead time on delivery of new capacity, the company has now begun to
release capacity for pre-paid lines. In the last two months, the
company has been selling about 5,000 new lines per day, and expects
this to increase dramatically over the months as more and more
equipment is received and installed.
