TELECOMMUNICATIONS giant, Econet Wireless Zimbabwe (Econet) posted a $1,1 trillion loss, leading to a 35% drop in liquidity in its Zimbabwe dollar earnings for its financial year ended February 29, 2024.
The loss was on the back of increased exchange losses, leading to increased costs and expenses as the abandoned local currency depreciated by over 500% during the period under review.
In the comparative 2023 period, Econet posted a loss of $317,82 billion.
Consequently, Econet recorded having just 60 cents to every dollar of short-term debt for the period under review, from a 2023 comparative of 93 cents.
Owing to exchange losses experienced from the Zim dollar’s depreciation, the group’s payment of US$15 million to shareholders in its dividend declaration, ate into the company’s liquidity.
Despite this, the group reiterated that it had enough liquidity to continue as a going concern.
“The group’s exposure to foreign currency denominated obligations is mitigated by non-current financial assets at amortised cost and financial assets at fair value through other comprehensive income with a combined carrying amount of $3,1 trillion, largely denominated in foreign currency,” Econet said, in a statement attached to its financial year results for the period ended February 29, 2024.
“Should the need arise, the noncurrent assets can be utilised to generate additional foreign currency to settle the foreign obligations.
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“The directors have reviewed the group’s cash flow forecasts to 30 April 2025 and, in light of this review, the current financial position and undrawn facilities, are satisfied that the group has access to adequate resources to continue in operational existence for the foreseeable future.”
The Zimbabwe dollar was scrapped on April 5 due to its volatility and this was followed by the adoption of Zimbabwe Gold (ZiG) as the new local currency.
Econet chairman James Myers said currency depreciation and exchange losses of $3,2 trillion translated to 22% of revenue, against 23% in the company’s prior year performance.
“Inflation-adjusted revenue for the period under review was $ 14,8 trillion. This represents revenue growth of 133% in comparison to last year’s performance.
“Investment in network modernisation resulted in volume growth of voice and data of 34% and 36% respectively,” Myers said.
“Cost optimisation strategies adopted by management yielded positive impact on margin profitability which was above 45%.
“The depreciation of the local currency during the year weighed down the group’s financial performance.
“Exchange losses for the period under review were $ 3,2 trillion translating to 22% of revenue against 23% for the prior year.”
Expenses and costs for the period under review totalled $7,83 trillion, an increase of 110% from the 2023 comparative period.
Myers said that pursuant to the retirement of Econet’s debentures in October 2023, the group’s exposure to foreign currency denominated obligations significantly reduced.
“This has had a positive impact on profitability,” he said.
“ Although the financial statements were impacted by the hyperinflation of the ZW$, we look forward to benefits of the new currency, the Zimbabwe Gold (ZiG), introduced on the 5th of April, 2024.”
The company paid a total of $3,8 trillion, 26% of its turnover, to the fiscus and statutory bodies during the period under review from a 2023 comparative of $2,1 trillion.
The payments to the fiscus and statutory bodies were in the form of excise duties, levies, corporate taxes, customs duty, withholding taxes, and monthly license fees.
Total assets saw a dip of 8,41% to $12,14 trillion during the period under review, compared to the 2023 comparative, as Econet experienced a drop from the group’s financial assets at fair value through other comprehensive income.
Myers said the group expects to experience high product demand in the coming year, as it has invested in infrastructure to meet consumer demands.
“The business continues to experience sustained growth in the demand for its products and services shaped by evolving customer needs,” he said.
“We will continue to invest in our network infrastructure in order to meet customer demands and keep abreast with global trends in line with our vision of a digitally connected future that leaves no Zimbabwean behind.”
He said the group was looking forward to scaling up its 5G penetration to unlock new opportunities, leverage on artificial intelligence and process automation to improve operational efficiencies and customer service delivery.
The group will also be incorporating artificial intelligence in its operations to improve revenue adding that the group has seen a 47% growth in its usage in the voice segment.
“To improve usage and revenue, we integrated intelligent recommendation engines and predictive models into our daily operations.
“This has enabled us to deliver a remarkable 47% growth in usage in the voice segment,” Myers said.
Econet is also investing in renewable energy to mitigate power challenges and improve network availability across the country.
“As power outages on the national grid remained prevalent, we have continued to deploy renewable energy solutions to mitigate service degradation,” Myers said.
“Consequently, the business was able to maintain a high uptime on the majority of our base stations.
“We will continue to invest in green power solutions to improve network availability.”
