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Econet Suffer FY23 Loss As Power Cuts, Vandalism, Low Tariffs Weigh

Telecommunications giant, Econet Wireless Zimbabwe plunged into a ZW$ 17 billion loss for the year ended February 2023 succumbing to a cocktail of operational challenges including energy shortages, vandalism and sub-optimal tariffs.

In its full year financial results, the group said alternative energy sources immensely upped its costs as load shedding averaged 18 hours a day. This also led to network failure in some areas.

Group revenue recorded a 20 percent rise to ZW$ 339.3 billion driven by growth in voice and data usage of 19 percent and 58 percent, respectively.

But the tariff adjustments were not adequate to offset the increase in inflation which closed at 230 percent in January 2023.

“Despite the revenue increase on account of usage, the earnings before interest, taxation, depreciation, and amortization (EBITDA) margin decreased from 52% to 40% for the year under review. The disparity between the revenue growth and EBITDA margin is reflective of the sub-economic tariff environment coupled with accelerated exchange rate depreciation,” said the group.

The Group incurred exchange losses of ZW $77 billion which translated to 23 percent of revenue against a prior year comparative rate of 6 percent of revenue.

“The local currency lost value by more than 85% during the year under review which had a negative impact on overall profitability.”

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The business also experienced vandalism on its critical network infrastructure. To reduce vandalism on network equipment, the business instituted various monitoring and deterrent measures.

The company commissioned eighty (80) new base stations providing additional coverage and capacity and commenced the deployment of a new modern core network with new generation cloud capabilities.

The prevailing tariff environment is a threat to the long-term viability of the local telecoms sector and curtails the ability of the sector to invest appropriately to meet customer demand, thereby undermining the quality of service.

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