Econet Wireless Zimbabwe CEO, Douglas Mboweni
Source: Big Law IR
Econet Wireless Zimbabwe’s strategy to steer the business towards value added services is beginning to bear fruit, as its overlay services showed strong growth in the half year to August 2014.
Non-voice services – products such as EcoCash, data services and others – now contribute 21% to Econet’s revenues, up from below 10% this time last year. Cumulatively, the contribution of these products to Econet’s revenue has grown by 96% since the company began implementing the strategy.
With Zimbabwe’s mobile penetration rate now above 100%, voice revenues are beginning to mature. This trend is not unique to Zimbabwe, as it is common wherever markets reach such levels of maturity.
In response, Econet earlier this year announced a new thrust in strategy, under which the business would focus more on growing overlay services to drive revenue growth and margin improvements into the future.
The latest financial results show that the strategy is working.
“We had anticipated the trend away from traditional income streams. We then took a strategic decision to steer the business towards innovations that would become new sources of growth for our business. We are beginning to see the fruits of that strategy,” Econet CEO Mr Douglas Mboweni said at a briefing to present Econet’s results for the half year to August.
He however added that voice services would remain a critical service offering and would continue to receive the appropriate attention. New investment is being committed to improve quality of service and customer care, he added.
Reflecting the growth in non-traditional income streams, the number of EcoCash subscribers has grown to 3.7 million from 3million in August last year. The number of agents has more than doubled, rising from 7000 last year to over 15 000. The number of broadband subscribers shot up from 3.6 million in August last year to 4.7 million this year.
“While the growth in subscriber numbers for both EcoCash and broadband is itself impressive, our strategic focus is on ensuring we add value to those platforms. By adding a wide range of product and services, we are seeing strong growth in usage across the platforms,” said Group Chief Finance Officer, Mr Roy Chimanikire.
The revenue from these new products continues to grow while the initial investment costs decline, he added. Econet’s banking subsidiary, Steward Bank, was now turning the corner as it has managed to sharply narrow its losses in the reporting period. The bank has been pivotal in Econet’s strategy to diversify its sources of income.
“We are confident that Steward Bank is now on a strong footing and it will remain key to our new strategic focus,” Mr Mboweni said.
In the half year to August, Econet recorded a 4.2% rise in revenue to $392.3 million.
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