Econet profits hit US$141m

HARARE – Zimbabwe's biggest mobile phone operator Econet Wireless Zimbabwe maintained a stranglehold on profitability, as it registered a 25 percent growth in after-tax profits to US$141 million for the year ended February 28, 2011.\r\n

After-tax profits increased to US$141 million from US$113 million for the previous year as its capital investments and new products bore fruit.
The profits were built on strong growth in earnings before, interest, tax, depreciation and amortisation, which jumped from US$179 million to US$243 million in the 12 months to February 2011.

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As such, earnings per share jumped by 26 percent from US$660 000 in the full year to February last year to US$830 000 in the last financial period.
Econet, which benefited from strong growth in subscriber numbers and an expanded service range, saw its revenue increasing by 36 percentage points to US$494 million.

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On the basis of this performance, Econet directors decided to reward shareholders by declaring a cash dividend of US12,16 cents per share.

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Econet has managed to sustain and grow its profitability as it benefited from first mover advantage, which saw it sink US$270 million into network investment and now carries 5,5 million subscribers, which has grown by 55 percent in the full year to February.

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As other mobile firms struggle to raise funding, Econet benefited from its close ties to Swedish and Chinese firms Ericsson and ZTE, respectively, which provided vendor financing in the form of equipment.

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To that end, the country’s biggest mobile phone operator has in the last two years invested US$430 million towards network construction, which enabled it to introduce more services and products.

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Ecolife Econet’s mobile insurance product and the country’s first mobile broadband, both of which received overwhelming support from subscribers, enhanced the firm’s revenue generation capacity.

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Owing to Econet Wireless’ massive capital investment in mobile phone network expansion the country’s mobile phone service penetration rate rose from 40 percent last year to 66 percent this year.

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After completing its major network upgrade this year, Econet intends to shift focus towards optimising the capital investments to improve network quality and enhance data capacity and value added services.

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Meanwhile, the company has indicated it still owns Meikles Limited and Kingdom Financial Holdings shares. It had announced last year they had been sold to a local consortium, Loackape Investments.

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Econet had announced the shares had been sold to Loackape at the height of the shareholder wrangles that rocked Meikles for most of 2009.
Econet said it would distribute to shareholders shares held by the company in Meikles and Kingdom. The mobile firm holds 20 739 650 shares in Meikles and 41 479 300 shares in the financial services group.

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“The share price shall be taken to represent the value of both Meikles Limited and the Kingdom Financial Holdings Limited share,” said Econet.
In that respect shareholders would receive 0,1261 Meikles shares for every Econet share and 0,2522 Kingdom share for every Econet share. Fractional shares will be transferred to the Econet Pension Fund.

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Econet, valued at US$637 million, is Zimbabwe’s biggest mobile phone operator by subscriber numbers, network coverage and assets.