BUSINESS REPORTER
Zimbabwe’s largest mobile telecommunications operator, Econet Wireless Zimbabwe slipped into a ZWL$5.78bn loss in the six months to August 31, 2022, attributed to sub-optimal tariffs which were outpaced by inflation.
In the same period last year, Econet posted a profit of ZWL$25.3bn.
Revenue for the group declined 1% to ZWL$112.4bn from ZWL$114bn.
EBITDA decreased 17% to ZWL$52.2bn in the reviewed period from ZWL$62.6bn reported in the prior comparative period.
In a statement accompanying Econet Wireless financial statement, board chairman, James Myers attributed the poor performance to the tough operating environment and high inflation.
“The reduction in our profit margin was partly attributable to low revenues due to sub-optimal tariffs coupled with cost pressures experienced under the hyperinflationary environment. As a result of the exchange rate movements over the last six months, the business recorded foreign exchange losses of ZWL$ 43.7bn representing 39% of revenue against a prior year comparative of 2% virtually eroding any possibility of achieving an accounting profit,” Myers said.
He said the subdued revenue performance was indicative of frequent tariff reviews that are lagging behind inflation and changes in the consumer price index.
For the period under review, year-on-year inflation was 285% and the tariff increase of 61% was not adequate to cover the loss in value, Myers said.
He said the reduction in profit margin was partly attributable to low revenues due to sub-optimal tariffs coupled with cost pressures experienced under the hyperinflationary environment.
Econet is planning to focus on customer experience and delivering value enabling the business to maintain strong key operating metrics during the first half of the current fiscal year.
Myers also said the telecommunication traffic monitoring system adversely affected Econet Wireless Zimbabwe.
He said this has placed an additional tax burden of US$0.06 per minute on the business on international incoming traffic, thereby increasing the cost of delivering services.
It is anticipated that these increased taxes will result in customers opting to use alternative calling platforms such as WhatsApp, among many other platforms.
“…these taxes are additional revenue taxes to those already paid by the company before any allocation of revenue to cost of operations and unwittingly create unequal regulation and disadvantages licensed operators,” Myers said.
He said foreign currency scarcity continued to negatively impact the group’s various network expansion and routine maintenance plans.
Myers also said Econet was planning to expand its 5G network in the country, adding it would be “pivotal in delivering additional digital growth services to both our retail consumers and enterprise customers”.
