Mobile telecommunications giant, Econet Wireless Zimbabwe Limited (EWZL)’s profits remained in the positive despite a major decline to record $ 106 million for the year ending 28 February 2019 as compared to $ 132 million realized during the same period prior year following a de-merger with tech-firm Cassava Smartech.
Profits were affected by the un-bundling of Cassava Smartech Zimbabwe Limited (CSZL) on the 18th of December 2018 from Econet Wireless Zimbabwe Limited and listed on the Zimbabwe Stock Exchange which resulted in EWZL ceding some of its profitable subsidiaries such as EcoCash, EcoSure, Econet Insurance, Steward Bank and Steward Health to CSZL.
Prior to the de-merger, Cassava contributed 39% to EWZL’s revenue during first half of 2018 ending in August.
However following the merger, the Group’s shareholder value has firmed, as the two separate entities now constitute close to 40 percent of the Zimbabwe Stock Exchange market value, with Econet retaining 20 percent of Cassava.
“The combined value of the now separately listed companies is much more than the value of the previously integrated EWZL, which demonstrates how shareholder value has been unlocked. EWZL and CSZL, together, now comprise about 40% of the market value of the Zimbabwe Stock Exchange. Econet retained ownership of 20% of CSZL, a shareholding which is worth more than ZWL 1.14 billion, as at 21 June 2019,” EWZL chairman, Dr James Myers said in statement.
EWZL total assets nearly doubled, reaching $ 2.397 billion in 2018 against an asset of $ 1.538 billion recorded in 2017.
Total revenue increased to $ 1.1 billion in 2018 as compared to $ 831.6 million received during the previous year while the Group posted an operating profit of $ 808.7 million in 2018 against $ 573.8 million in 2017.
However capital investment during the year was subdued owing to challenges in accessing foreign currency in the economy.
“Capital investment in infrastructure development was subdued for the period under review due to limited access to foreign currency. This has a negative impact on our ability to sustain
a comprehensive service offering as we transition to a digital economy,” Myers said.
However Econet seeks to leverage on the smart partnerships with Cassava while it purses data revenue growth initiatives in response to increased use of internet services driven in part by the growth in adoption of smartphones going forward.
“The Group will continue to collaborate with smart technology businesses in Cassava SmarTech for separate value creation objectives whilst recognizing and leveraging the synergies that have historically existed between the two separate entities,” said Myers.
