Zimpapers Logo

Fradreck Gorwe
Zimbabwe’s mega telecoms company commanding a huge market share, Econet Wireless Zimbabwe, has reported a decline in traffic volumes for the nine months to October 2019.

The fall in voice minutes, data and SMS traffic volumes was attributable to declining consumer purchasing power following inevitable headline tariff adjustments in August and October 2019.

While the company engaged the regulator, POTRAZ, to effect tariff adjustments to sustain the rapid local currency depreciation, customers on the receiving end suffered depressed disposable incomes.

Econet said it continues to try to be proactive through customisation of consumer packages to maintain affordability as well as conforming to the confines of responsible business practice.

“Traffic volumes declined from the previous quarter following the headline tariff adjustments in August 2019 and October 2019.

“The business continues to customise consumer packages to maintain affordability in light of the depressed consumer disposable incomes whilst pricing within the confines of responsible business practice,” said Econet in a quarterly trading update.

Voice minutes in the Financial Year 2020 third quarter fell by 8 percent compared to 2020 second quarter. Data volumes went down by 30 percent in third quarter 2020 compared to the second quarter. SMS volumes also dropped by 35 percent in third quarter 2020 compared to the second quarter.

Irrespective of third quarter 2020 volumes fall, the company’s year-to-date performance was commendable. Volumes had grown significantly in third quarter 2020 if compared to third quarter 2019.

Voice minutes had increased by 20 percent, data volumes by 26 percent and SMS volumes by 7 percent. This year-to-date performance, reflective of strong demand in products and services, enabled the company to acquire a huge market share over the period and to maintain its position as “a leader in the sector with a customer market share of about 70 percent.”

With regard to financial performance, “the Board and Management are of the view that the financial performance trend for the third quarter of FY2020, was in line with the recently published results for the half year period ended 31 August 2019.”

Meanwhile, the company remains proactive to current and future challenges be-devilling the business. Among these are erratic power challenges and high inflation.  Further, the company decried continual devaluation of tariffs despite increases on the same.

As mitigatory measures, Econet considers continual engagement with POTRAZ to effect a sustainable tariff regime that “will ensure continued viability of the sector as well as ensure that quality of service standards.” On erratic power challenges, the company adopted as innovative solutions “the deployment of solar equipment and hybrid batteries across base stations and switching centres.” The deployment is now at advanced stage.

To minimise the pain inflicted by local currency depreciation, Econet invested in Liquid Telecom Holdings, which investment, more than offset its exposure to foreign currency vendor obligations and thereby giving the company a “net positive foreign currency asset position.”

Further going forward, the company will focus on cost containment and cash-flow management;

“The Company will continue to focus on market leadership through understanding its customers and providing service quality that is unparalleled in this market. Due to hyperinflation, cost containment and cash flow management are key focus areas for the remainder of the financial year,” said Econet Wireless.