Oliver Kazunga Senior Business Reporter
ECONET Wireless Global (EWG) has shut down and put on auction its water purifying company, Seldon Technologies, in a move blamed on negative economic performance. EWG is the holding company of the country’s leading telecommunications firm, Econet Wireless Zimbabwe. International media reports indicate since 2011, Econet Global had pumped about $20 million investment into the US based company.
Concluding what is likely one of the Econet group’s biggest investment missteps, the company this month reportedly hired an auctioneer to sell off the company’s assets, mainly IP at a reserve price of $1.5 million, Techzim, a local online technology magazine, reported.
Econet is reported to have owned 85 percent of the company, which ceased operations two months ago and laid off workers. Seldon Technologies supplied water and purification products that Econet sold in Zimbabwe and planned to distribute in Africa.
While Seldon had patented innovation, the carbon nanotubes meant to purify water by filtering out contaminants, Techzim reported the entity “had little or no effect on performance” of the business.
“The company’s secret sauce, it turned out, wasn’t doing much. It was ordinary filtration technology in common use that was being used. Econet also found that the company (Seldon Technologies) had no capacity to commercialise their technology,” read one of the online reports.
“A turnaround strategy was formulated and Econet even temporarily appointed its Johannesburg based group executives to oversee the company, but the turnaround failed.”
EWG eventually made a $10 million investment into the water purification firm in February 2012, which included $1 million for distribution rights for Seldon’s devices in Africa.
In 2013, EWG acquired 85 percent stake in the company, which at the time, promised to breath a new lease of life to the group. Official comment could be obtained from Econet Zimbabwe CEO, Douglas Mboweni, whose cell phone was not reachable.
Meanwhile, the group’s local subsidiary, has also been facing viability challenges on the back of a 52 percent drop in profit after tax to $23,8 million for the half year period ending August 31, 2015 from $49,6 million during the same period last year.
Revenue for the giant telecoms firm also fell 17,7 percent to $323 million from $392,3 million during the same period last year. Finance costs were, however, 17,9 percent up to $21,2 million from $17,4 million.
Econet has attributed the decline in revenue to the economic climate prevailing in the country and the impact of significant regulatory changes on its business.
Early this year, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) instructed all telecommunication operators to revise voice tariffs downwards by 35 percent, a situation which resulted in a drop in revenue for all operators.
In October, the telecommunications firm announced that it was laying off about 100 of its workers as the country’s largest telecommunications company was grappling with declining revenues and the effect of taxes imposed over the past year. – Additional reporting by Techzim