This year marks a significant milestone in our journey as we commemorate our 25th anniversary. As we celebrate this milestone, we reflect on how resilient and agile our business has been, evolving from a mobile voice telephony operator to becoming a digital service provider (DSP) that touches the lives of all Zimbabweans. We celebrate the enduring memories we have created with our customers.
Our business continues to support the growing demand for digital services in line with global trends in the telecommunications sector, leveraging on cloud adoption and artificial intelligence whilst keeping our customers safe online with cybersecurity solutions. Digital services and next generation connectivity have become increasingly central to our livelihoods and this presents an imperative for us to accelerate digital inclusion.
Viable pricing of telecommunication services remains a key factor for the continued growth and sustainability of the industry. The volatile operating environment continues to significantly erode the benefits of any tariff adjustments. Regular and effective tariff reviews that track inflation and exchange rate movements are critical to ensure the viability and sustainability of the sector. According to the Postal, Regulatory Telecommunications Authority of Zimbabwe (POTRAZ) voice and data tariffs remain at discounts of 58% and 88% respectively to the region.
Infrastructure modernization review
We successfully leveraged the partnerships we have with our major equipment vendors to modernize our network after several years of under-investment. From an investment level of less than 5% of revenue in previous years, capital investments for the period rose to 24% of revenue, in the period under review. As a result, we modernized 252 base station sites in the first quarter, and 439 base station sites in the second quarter, covering Harare and Bulawayo.
The network modernization entails replacing old equipment that had limited capacity or is no longer supported by the vendors. The modernized equipment has better performance, capacity and coverage.
Our environmental, social and governance (ESG) strategy continues to mature on the back of continued investment driven by our belief in sustainable business practices. We remain committed to achieving Net Zero by lowering our carbon footprint through various initiatives which include reducing the use of diesel generators through investing in solar renewable energy solutions. During the second quarter, we underscored our commitment by participating in the Carbon Disclosure Project survey as part of efforts to monitor and manage our environmental impact.
The financial review is based on inflation adjusted financial statements which are the primary financial statements. Historical cost financial statements have been presented as supplementary information. To comply with International Accounting Standard 29 – Financial Reporting in Hyperinflationary Economies (IAS 29) in the preparation of our financial statements, the Group estimated and applied inflation rates for the half year ended 31 August 2023 based on the Total Consumption Poverty Line published by ZIMSTAT.
The estimation of the consumer price index is permitted by IAS 29 where a general consumer price index is not readily available. As previously advised, the Directors caution users of the financial statements on the usefulness of these reported financial statements, considering distortions that arise when reporting in a hyperinflationary economy.
Growth in revenue resulted from a volume growth of 24% and 25% for voice and data respectively. However, the Group incurred a loss before monetary adjustment of ZW$24 billion against a prior period comparative loss of ZW$40 billion resulting from inflationary pressures in the economy that affected profitability.
Exchange losses from US dollar denominated liabilities driven by the weakening local currency continue to have a negative impact on the Group’s performance. During the period, the Group incurred exchange losses amounting to ZW$375 billion representing 34% of revenue against a prior period comparative of 39%.
Shareholders duly approved the rights offer scheme to raise US$30.3 million in fresh equity to redeem US dollar denominated debentures that matured at the end of April 2023. As disclosed in the rights offer circular, the Company intends to apply the net proceeds from the Rights Offer to redeem the company’s matured debentures.
In light of the ongoing capital expenditure program of the Group, the Directors resolved not to declare an interim dividend for the half year.
Corporate social investment
Through our implementing partner, Higherlife Foundation, the Group continues to undertake several initiatives aimed at making a positive impact within the communities in which we operate.
Education remained a key focus area for the Group. During the period under review, we embarked on a recruitment exercise that awarded more than 5,300 scholarships to orphaned and vulnerable children. In total, more than 11,100 students are benefiting from various scholarships under Higherlife Foundation. Our digital platform, Akello, continued to provide quality education to children in vulnerable communities which saw more than 34,600 students accessing the platform through Akello tech scholarships.
Under the Rural Transformation and Sustainable Livelihoods initiatives, we continued implementing farming initiatives and activities to support farmers in various districts. To ensure practical training, we developed a comprehensive manual for equipping 45 community-based farmers (lead farmers) and 73 Agritex Officers as proficient Climate Smart Agriculture trainers and extension officers. This manual played a vital role in imparting the necessary skills and knowledge to successfully promote and implement the training. About 13,300 farmers received training, up from 10,000 in the previous season. Inputs were also distributed to farmers for one plot of each of three crops: maize for food security, bio-fortified sugar beans for nutrition, and groundnuts as a cash crop to increase household incomes.
Transforming our business model to a fully-fledged digital service provider remains an urgent imperative. We will continue modernizing our network infrastructure to unlock opportunities presented by emerging technologies to broaden and diversify our service offering. Artificial intelligence and process automation will be pivotal in improving operational efficiencies and customer service delivery.
On behalf of the Board, I wish to express my appreciation to our valued customers and all our stakeholders who have contributed to the success of our business over the last 25 years. I would also like to express my gratitude to our dedicated staff and fellow Board members whose efforts have carried the business this far.
Dr. J. Myers
Chairman of the Board
20 October 2023
Econet Wireless Abridged consolidated financial statements for the half year ended 31 August 2023.pdf
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