Econet Wireless Zimbabwe – Audited Abridged Consolidated Financial Statements for the year ended 29 February 2024

By Published On: May 30th, 2024Categories: Corporate announcement, Earnings

Chairman’s statement

Introduction

Our business continues to be focussed on fulfilling our strategic objective of digital transformation to meet the evolving needs of our customers and deliver improved customer experience through the use of data-driven insights and supported by a modern digital network.

This year we celebrated memories and value created for customers and business partners since our commercial launch in 1998. Our award-winning campaign themed “Hallo 25, Building Memories Together” embodied the essence of our journey, encompassing a reflection on our past achievements, a celebration of our present impact, and the memories we continue to generate as we bring digitally solutions that are empowering our customers economically.

Regulatory Review

The Telecommunications Association of Zimbabwe (“TOAZ”) of which Econet is a member continues to work with all concerned stakeholders to ensure the viability and sustainability of the Sector.

For the period under review, we paid a total of ZWL$ 3,8 trillion (representing 26% of turnover) to the fiscus and to statutory bodies compared to ZWL$ 2,1 trillion in 2023. The payments to the fiscus and to statutory bodies was in the form of excise duties, levies, corporate taxes, customs duty, withholding taxes and monthly licence fees.

Infrastructure Modernisation Review

Our strategic partnerships with key equipment vendors have enabled us to accelerate our current network modernisation programme, after several years of underinvestment, due to limited foreign currency availability. We have now modernised over 1,012 sites with 4G high-capacity base stations. Of these, 750 are in Harare and Bulawayo and the whole of Manicaland region. Our modernization efforts will continue with another 550 base station sites planned across the country. We are grateful that Government through POTRAZ has now provided us spectrum within the 700MHz frequency band which will extend the coverage of existing base stations to serve customers who are at the periphery of the current coverage limit. Spectrum refers to radio frequencies present in the air that telecom companies use to provide connectivity services. In addition to the modernized sites, the business added more than 50 new base station sites. This investment has enhanced our quality of service and also increased network coverage.

Artificial Intelligence (AI) has become an integral part of our business operations. For the year under review, we significantly accelerated the use of AI tools to improve operational efficiency, optimise our business and provide superior customer experiences. For example, we deployed algorithms which greatly improved our ability to segment customers and offer highly personalized experiences. This has resulted in increased customer activity ratios. To improve on usage and revenue, we integrated intelligent recommendation engines and predictive models into our daily operations. This has enabled us to deliver a remarkable 47% growth in usage in the voice segment.

As power outages on the national grid remained prevalent, we have continued to deploy renewable energy solutions to mitigate service degradation. Consequently, the business was able to maintain a high uptime on the majority of our base stations. We will continue to invest in green power solutions to improve network availability.

Financial Review

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 year ended 29 February 2024 based on the Total Consumption Poverty Line published by ZIMSTAT.

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.

Inflation adjusted revenue for the period under review was ZW$ 14,8 trillion. This represents revenue growth of 133% in comparison to last year’s performance. Investment in network modernization resulted in volume growth of voice and data of 34% and 36% respectively. Cost optimisation strategies adopted by management yielded positive impact on margin profitability which was above 45%.

The depreciation of the local currency during the year weighed down the Group’s financial performance. Exchange losses for the period under review were ZW$ 3,2 trillion translating to 22% of revenue against 23% for the prior year. Pursuant to the retirement of our debentures in October 2023, the Group’s exposure to foreign currency denominated obligations significantly reduced. This has had a positive impact on profitability. Although the financial statements were impacted by the hyperinflation of the ZW$, we look forward to benefits of the new currency, the Zimbabwe Gold (ZiG), introduced on the 5th April, 2024.

Environmental, Social and Governance

Ensuring the sustainability of our shared world and business, effective stakeholder management and engagement, as well as adhering to sound environmental, social and governance (ESG) principles remain at the core of our values. We engaged in the Sustainable Development Goals (SDG) Accelerator Program under the United Nations Global Compact, to integrate SDGs into our corporate framework, solidifying our footprint in the ESG space.

The business implemented a robust staff wellness program covering six pillars that included emotional, physical, financial, medical, occupational, and spiritual dimensions. These aspects are designed to provide a supportive work environment.

Since its inception, the Group has supported our CSI implementing partner, Higherlife Foundation, to empower the next generation through deep investments in education from early childhood development to tertiary education. The foundation funds scholarship programmes, conducts training and mentorship and strengthens local institutions including schools and orphanages.

Board Changes

The Board wishes to advise that Mr. Martin Edge resigned as Independent Non-Executive Director of the Company. The Board records it’s appreciation of Mr. Edge’s commitment and dedicated service as an Independent Non-Executive Director since his appointment in June 2013. He served diligently as Chairperson of the Audit Committee and also served on the Board Risk Committee. The Board, Management and Staff wish Mr. Edge the best in his future professional and personal endeavours.

Mr. Godfrey Gomwe was appointed Audit Committee Chairperson. Mr. Gomwe was a member of the Audit Committee for a number of years and brings a wealth of experience to this critical role.

Mr. Mgqibelo Gasela has been appointed Chairperson of the Risk Committee as Mr. Gomwe transitions to his position on the Audit Committee.

There are no changes to the ESG and Remuneration committees, chaired by Dr. Jacqueline Chimhanzi and Dr. James Myers respectively.

Outlook

The business continues to experience sustained growth in the demand for its products and services shaped by evolving customer needs. We will continued to invest in our network infrastructure in order to meet customer demands and keep abreast with global trends in line with our vision of a digitally connected future that leaves no Zimbabwean behind.

We are looking to scale up our 5G penetration to unlock new opportunities, leverage on artificial intelligence and process automation to improve operational efficiencies and customer service delivery.

Dividend

The Company declared and paid an interim dividend of 0.55 US cents per share for the year ended 29 February 2024 in respect of qualifying ordinary shares of the Company.

Appreciation

On behalf of the Board, I wish to express my gratitude to our valued customers, business partners and stakeholders who have been part of our successful 25-year journey. I wish to thank our dedicated and exceptional staff who continue to serve the business in a challenging operating environment. I also wish to record my appreciation for the commitment of my fellow Directors as we discharge our stewardship responsibility to all our stakeholders.

Dr. J. Myers
Chairman of the Board

29 May 2024


Econet Wireless Zimbabwe Limited Abridged consolidated financial statements for the year ended 29 February 2024

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