Econet’s modernisation efforts to boost volumes and revenue: IH Securities

IH Securities says Econet’s continued modernisation efforts with an additional 550 base station sites planned across the country is expected to boost volumes and consequently revenue.

In its review of Econet Wireless Zimbabwe Ltd FY24 earnings, IH said Econet has maintained pole position with 80,9 percent and 83,7 percent market share in mobile voice and data traffic, respectively, as at December 2023.

“POTRAZ has now provided spectrum within the 700MHz frequency band which will allow mobile operators to extend the coverage of existing base stations to serve customers who are at the periphery of the current coverage limit.

“Focus for management will be on investing in the network infrastructure to meet customer demands and scaling up 5G penetration to unlock new opportunities,” reads the IH review.

In addition, it said the ongoing acquisition of non-banking assets from EcoCash, if value accretive, may offer the Group synergies to develop value creation competitiveness.

IH noted that Econet’s data category has maintained an upward trend, going from 33 percent of revenue in FY23 to 36 percent in FY24.

“Increased data usage is expected to sustain with global digitalisation. POTRAZ figures show that sector-wide mobile internet/data traffic increased by 4.7 percent from 3Q23 to 4Q23.

“However, this category will likely face new competition with the entry of satellite internet into the telecommunications sector, which is promising faster data speeds at lower tariffs, leaving a potential downside,” reads the IH review.

It noted that historically, Econet has suffered losses due to its high exposure to local currency earnings.

However, with the introduction of the new currency, there is upside to real earnings provided currency stability is maintained.

Following years of underinvestment due to limited foreign currency, Econet utilised strategic partnerships to accelerate its network modernisation programme during the period.

The Group modernised over 1,012 sites with 4G high-capacity base stations and in addition, the business added more than 50 new base station sites.

“This investment enhanced Econet’s quality of service and also increased network coverage, resulting in volume growth of voice and data of 34 percent and 36 percent, respectively,” IH said.

It indicated that the Group also leveraged artificial intelligence (AI) tools to segment customers and offer highly personalized experiences, driving increased customer activity ratios and 47 percent growth in usage in the voice segment.

IH said as power outages on the national grid remained prevalent, Econet continued to deploy renewable energy solutions to mitigate service degradation.

Consequently, historical revenue increased 1,022 percent to $3,00 trillion from $267,286 billion in FY23. -ebusinessweekly