Econet cuts costs by $70m

Douglas Mboweni

Douglas Mboweni

Business Reporter
THE country’s biggest mobile phone operator, Econet Wireless, says it has to date cut costs by $70 million, including a 20 percent pay cut on all staff.

This comes as chief executive Douglas Mboweni refuted media claims that the company had retrenched hundreds of workers in order to rein in costs.

He said measures taken to cut costs had restored strength and stability to the company’s cost structure and that the company was ready to weather any storm.

“We have cut costs by almost $70 million to date and restored strength and stability to our cost structure. We are ready to weather any storm as a company. It’s part of our DNA,” the mobile telecommunication giant’s CEO said.

“We as a company opted to cut all salaries by 20 percent rather than undertake wholesale retrenchments. This we did after full consultations and consent of the majority of our staff.

“The small number of people we released had other issues related to their contractual obligations, which I’m not at liberty to discuss,” said Mr Mboweni.

“We did a deep analytical study of this and concluded that a 20 percent salary cut was the best approach (for Econet).

“In Zimbabwe we need to remember that the US dollar is a double-edged sword for this country,” he said.

The Econet Wireless boss contends that given the fact Zimbabwe primarily uses the US dollar and gets most of its consumer imports from South Africa, whose currency has tumbled more than 40 percent over the last five years to the dollar, the impact of salary cuts was not as serious as people may fear. Mr Mboweni said that Zimbabweans “should really consider quoting for goods in rands, even when paying in dollars, it could help ease our liquidity situation”.0

In the letters of notice to affected workers Econet said that its action was not retrenchment, but an exercise of the company’s right under common law.

Mr Mboweni said a total of 46 employees have been released by the mobile operator to date, but were not released as part of cost cutting measures.

The Econet CEO said while no one liked to cut salaries given the current economic environment it was a better option than wholesale retrenchments.

“We all need to try and protect jobs but regulators like POTRAZ need to play their part by not unnecessarily destabilising industries that are stable.”