Zambia hints at fifth telco operator

A fifth telco
for Zambia?

Enough room says
industry regulator.

Thursday, Feb 20th

Lower tariffs, consumer choice could hurt Zimbabwe's Econet

Lower tariffs, consumer choice could hurt Zimbabwe's Econet.

Zimbabwean telecommunications consumer preferences are shifting towards increased adoption of Voice over Internet Protocol (VoIP) and other data enabled platforms, say analysts, adding that this will result in lower revenues for Econet Wireless.

The Zimbabwean telecom company – which has more than 8 million registered mobile subscribers – reports its financials for the year to the end of February 2016 later this month.

Analysts at IH Securities are expecting revenue and profitability from the company to be weaker, with a tariff reduction enforced by the government in January also seen as worsening the profitability prospects.

"We expect Econet to report lower revenues as voice remains affected by the shift to VoIP and the regulatory tariffs affected by government," said Lloyd Mlotshwa and other analysts at IH Securities in a market note released Wednesday.

Investor interest on the Zimbabwe Stock Exchange (ZSE) has been lukewarm, but picked up in April for the first time in the past 14 months. Econet is one of the stocks in which investors continue to show interest.

"We, however expect the full extent of reductions in salaries to filter through and for cost optimisation to remain a priority," added the analysts.

In the year to February 2015, Econet Wireless' income from voice calls declined by 11% to US$477-million. Overall revenues, inclusive of voice, data and mobile money, marginally declined by 1% to US$746 million compared to the 2014 year end revenues, with income from data gaining ground as it grew 43% to US$103 million.

During the month of April, Econet Wireless – which competes against non-listed state owned NetOne and Telecel Zimbabwe – was the third stock with the highest trade values following a 6.56% value increase to US$0.92 million.

This helped the ZSE return "to the green in the month of April, as it rose for the first time" since February 2015, according to IH Securities.

Executives from mobile companies have complained that Over the Top (OTT) platforms such as social media and instant messaging applications are eating into their revenue streams.

However, the country's regulator, Potraz has urged mobile firms in the country to adopt the platforms and find ways to generate revenue from them.

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