Our platforms have significantly helped to drive the adoption of digital solutions in all sectors of the economy cementing our position as the mobile network of choice in Zimbabwe. Our services continue to bring increased efficiency and effectiveness to the way enterprises and individuals do business in Zimbabwe.
We have an important role in enabling business activity in Zimbabwe and work hard to be a valuable partner to all our customers. Our role as a critical business enabler to doing business in Zimbabwe is pivotal to economic growth and improving the well-being of the communities we serve. Zimbabwe would not be truly open for business in an increasingly digitalised world without reliable digital services.
SHAREHOLDER VALUE CREATION
Whilst we have always focused on creating shareholder value, the current economic environment has resulted in an increasing focus on strategies that preserve shareholder value. On 18 December 2018 Cassava SmarTech Zimbabwe Limited (“CSZL”) was demerged from Econet Wireless Zimbabwe Limited and listed on the Zimbabwe Stock Exchange. CSZL is now the new holding company for EcoCash, EcoSure, Econet Insurance, Steward Bank and Steward Health. All shareholders in Econet Wireless Zimbabwe Limited received shares in CSZL pro-rata to their shareholding in EWZL. The combined value of the now separately listed companies is much more than the value of the previously integrated EWZL, which demonstrates how shareholder value has been unlocked. EWZL and CSZL, together, now comprise about 40% of the market value of the Zimbabwe Stock Exchange. Econet retained ownership of 20% of CSZL, a shareholding which is worth more than ZWL 1.14 billion, as at 21 June 2019. A clear demonstration of the Board’s ability to identify and execute strategies that preserve and enhance shareholder value in difficult circumstances.
The agreement to sell the Company’s 51% stake in Liquid Telecommunications Zimbabwe (LTZ) for a stake in Liquid Telecommunications Holdings (LTH) created a unique opportunity to acquire a strategic interest in Africa’s largest open access cross-border fibre operator. This is an investment in United States dollars with prospects for dividends and capital appreciation in foreign currency. This investment is currently held at USD 135 million.
Econet continues to pursue data revenue growth initiatives in response to the increased use of internet services driven in part by the growth in adoption of smart phones by our customers, as the prices of these devices continues to fall. Strategic partnerships with key vendors remain a priority for the business. Capital investment in infrastructure development was subdued for the period under review due to limited access to foreign currency. This has a negative impact on our ability to sustain a comprehensive service offering as we transition to a digital economy.
Investment in renewable energy remains a key focus area for long term cost containment and business sustainability. A total of 116 solar powered sites were commissioned, thereby reducing generator runtime, fuel consumption and the related carbon dioxide emissions. Our solar journey, housed under Distributed Power Africa (DPA), gained momentum during the year. DPA operates as an independent entity and is rolling out solar projects totalling 7 MW of which 3 MW have already been commissioned. This is a tremendous achievement given the macro-economic challenges prevailing in the country. The Board is excited about this opportunity and the prospects of further reductions in energy costs and the increased availability of uninterrupted green power to our base station sites and other operating infrastructure. It is our hope that DPA, which requires foreign currency in order to import solar panels and associated infrastructure, will be able to sustain its growth model in the current environment.
The Group wide digital transformation journey continues and will see us deploy technology that will accelerate growth and improve customer experience. Key focus areas include business automation, sustainability, data analytics, cyber security, systems optimisation and systems consolidation.
There is strong demand for all the products and services which the Group offers. Our business model, which has been tested in difficult operating conditions remains the foundation on which our success is built. Our focus on delivering life transforming solutions using our digital platforms will ensure that we create and enhance value for our shareholders.
The Group will continue to collaborate with smart technology businesses in Cassava SmarTech for separate value creation objectives whilst recognising and leveraging the synergies that have historically existed between the two separate entities.
Throughout the year under review, we have implemented specific programs to assist staff in addressing the challenges they face in their personal lives due to the current economic conditions.
We believe in a brighter future for Zimbabwe and will continue to strive for an inclusive and connected future that leaves no Zimbabwean behind. We believe in the strong future of the Country and will continue to develop our business with a strong belief in Zimbabwe and its prospects.
Cognisant of the recent statutory instruments that resulted in a change in functional currency and its consequent impact on the company’s capitalisation plans, the Board has decided not to declare a fourth quarter dividend. The dividend paid for the year ended 28 February 2019 totalled ZWL 50 million.
N.B.: The above are excerpts from the Chairman’s Statement. For full results, download the documents below: