Econet says forex auction not adequate
Listed telecommunications giant, Econet Wireless, has said it is still trying to raise funds to clear its matured debentures.
The US$30,3 million debt matured in April this year and is yet to be settled.
Econet board chairman, Dr James Myers, in a statement said; “Subsequent to the year end, the company’s debentures matured at the end of April 2023. The company has been unable to secure foreign currency for the purpose of redeeming the debentures via the RBZ’s foreign currency auction process.”
He added that whilst Econet does generate some foreign currency from its operations, all is being deployed to pay for essential mobile network and related technology upgrades and expansion.
Accordingly, the company has announced a renounceable rights offer to raise US$30,3 million of foreign currency from its existing shareholders.
The company said a circular with further particulars will follow.
In order to redeem the existing debentures in the capital of both companies Econet and its offshoot, EcoCash Holdings, announced their intention to raise US$30,3 million through a renounceable rights issue.
The two companies issued cautionary statements earlier in the year to alert shareholders of their intention to issue new ordinary shares through renounceable rights offer.
A type of share offering called a renounceable rights issue gives current owners the chance to purchase more shares in proportion to their current holdings. As a result, present owners have the option to purchase a specific number of additional shares at a reduced price that is often lower than the going stock price.
“Part of the foreign currency we got saw the business invest US$66 million as part of its network modernisation programme,” Dr Myers said.
Network expansion and upgrades remain imperative to support business sustainability, which has been hampered by several years of under investment, due to ongoing macro-economic challenges.
Nevertheless, the Econet Wireless group strives forward. The depressed consumer environment will not offer much growth in the short term, and the unbundling of the tech operations means internal growth opportunities are limited as well.
However, it is positive that the group has been able to maintain its margins despite the inflationary pressures, although this may have come at the expense of operating efficiency, given the rising complaints about service quality.-ebusinesswekly
