There is more in Cassava beyond “EcoCash”

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Batanai Matsika

In our article, entitled “The Cassava & Econet Santa Claus Trade”, dated 19 December 2018, we draw conclusions that investors should HOLD Cassava Smartech Zimbabwe Limited (CSZL) on the basis that (i) ordinary valuation models do not account for the optionality embedded in pure technology companies of CSZL’s nature and (ii) there are compelling long-term growth prospects surrounding the CSZL investment story.

It is worth highlighting that the investment thesis in Cassava goes beyond mobile money (EcoCash) as it involves new relevant technologies that are set to be rolled out in the future.

Of course, from a Sub Saharan Africa (SSA) perspective, mobile SHORT VIEW Batanai Matsika Cassava Smartech Product Offerings money has been a clear winner as transactions have expanded rapidly. According to GSMA Intelligence, the total value and number of mobile money transactions in 2017 within the SSA region grew by 14,4% and 17,9% to reach USD19,9bn and 1,2 billion, respectively.

Mobile money platforms such as Ecocash have also played a key role in extending financial services to people with limited access to traditional financial institutions, particularly women and rural populations. That said, a key driver of growth for Cassava will be smartphone adoption. This is because Cassava is developing relevant platforms and applications that cut across fintech, edutech, healthtech amongst many others as in the infograph.

GSMA Intelligence also estimates that smartphone adoption will continue to see rapid growth in the SSA region despite affordability challenges. In the case of Zimbabwe, lowcost handsets are set to do the trick. Chinese players have traditionally dominated the feature phone mar ket in Africa but are now increasingly active in the smartphone market, though Samsung remains a leading player in this market segment. Con sumers across the region no longer view mobile phones as just a communication device but also as a primary channel for getting online and a vital tool to access life-enhancing services.

Mobile network assets and services, such as APIs, cellular IoT, mobile money and billing platforms, are enabling sustainable business models for key services across verticals in the region. While Cassava ratings look demanding, the long term prospects of the technology company are strong. Currently, we see more upside potential in Econet Wireless Zimbabwe Limited (EWZL).

Mind you, smartphone and app adoption is set to drive strong growth in data traffic which will translate to increased data revenues. Further, EWZL maintains 20% in CSZL and c10% in Liquid Telecom Holdings (a foreign asset). BUY EWZL!