Oliver Kazunga, Senior Business Reporter
ZIMBABWE’s largest telecoms operator, Econet Wireless, yesterday reported a 52 percent drop in profits to $23 million with a 17 percent dip in revenue to $323 million for the first half of its financial year to August 31, 2015.
During the comparable period last year, Econet’s revenue stood at $392,3 million.
Mobile broadband revenue retracted by 6.4 percent to $52.3 million, with overlay services revenue gaining by 29.1 percent to $35.5 million.
Profit for the period stood at $23,8 million, which represents a 52 percent drop from the $49,8 million recorded in the same period last year.
Earnings before Interest, Depreciation Tax and Amortisation (EBIDTA) also dropped by average 21 percent to $122.5 million.
The company has since instituted a 20 percent salary cut for its workers and sought a 15 percent price cut from suppliers among other cost cutting measures citing a difficult operating environment.
The giant firm blames weak aggregate demand, imposition of a five percent tax on airtime and a 35 percent slash on voice tariff, for reduced profitability.
“Against this very tough economic backdrop, some significant regulatory changes have also impacted our telecommunications business,” it said.
However, its dominant mobile money transfer service, EcoCash, continues to do well, creating over 21,000 jobs with its subscriber base growing to 4,9 million in the past four years, said Econet.
In a statement, accompanying its unaudited financial results for the period, Econet said EcoCash is now among the leading mobile money transfer services in Africa.
“With a subscriber base that has grown to 4,9 million and over 21,000 registered agents over a four-year period since its introduction on September 28 2011. EcoCash is now amongst the leading mobile money service providers on the continent. To further strengthen its innovative footprint in the mobile money transfer sector, EcoCash has, through its remittance partners, opened up a wide network of international remittances channels,” it said.
As part of its efforts to preserve value under the difficult operating conditions, Econet said a review of the capital expenditure budget was undertaken to align the budget with the challenging market environment.
This has resulted in capital expenditure declining from 20,4 percent to 14,1 percent as a percentage of revenue.
“In our continued efforts to demonstrate our commitment to Zimbabwe’s economic development and contribution to wealth-creation for all, the business continues to approach policy makers for dialogue on interventions that are required to protect and enhance the sector’s and company’s contribution to broader economy,” said Econet.