Batanai Matsika
On the 4th of February 2019, Facebook turned 15 years. The Facebook.com website was founded in a dormitory at Harvard and has been spreading wildly not only in America but also to the rest of the world. At its peak, the average user spent nearly an hour a day on Facebook’s platforms. Social platforms have largely grown in line with the global data revolution wave.
The new 2018 Global Digital suite of reports from We Are Social and Hootsuite reveal that there are now more than 4.0 billion people around the world using the internet. Interestingly, Africa has seen the fastest growth rates, with the number of internet users across the continent increasing by more than 20 percent yearon-year.
The data revolution has also created a strong growth opportunity for telcos.
With voice penetration levels in Africa having increased and in some cases reached maturity, the main predicament was that telcos had to continue to face the daunting task of staying “relevant” beyond their existing business models of just being airtime factories. Data has been the answer.
Telcos in Sub Saharan Africa (including ZSE-listed Econet Wireless Zimbabwe) have also taken advantage of social media platforms to drive data revenues.
Globally, social media continues to grow rapidly and the number of people using the top platform in each country has increased by almost 1.0 million new users every day during the past 12 months according to We Are Social.
More than 3.0 billion people around the world now use social media each month, with 9 in 10 of those users accessing their chosen platforms via mobile devices.
A comparative analysis of Sub Saharan Africa telcos shows that on a relative basis, Safaricom and Sonatel are cheaper with PERs of 16.7x and 9,2x, respectively versus 19,9x for Econet Wireless Zimbabwe.
Nonetheless, we opine that the lower internet and smartphone penetration levels in Zimbabwe relative to Kenya and Senegal justify the premium. Further, we are bullish on the long-term growth stories of Econet Wireless Zimbabwe as we expect synergistic benefits to filter through from Cassava SmarTech Zimbabwe Limited (a fintech operation). Econet Wireless Zimbabwe also has a 10% holding in Liquid Telecom Holdings (a foreign asset that is growing rapidly).
Author – Batanai Matsika Head of Research – Akribos Research Services+263 78 358 4745batanai@akriboscapital.com
