ECONET Wireless’ shareholders have approved a ten for one share split, which is aimed at making the company’s shares more accessible to small investors as well as boost trading in the counter at the Zimbabwe Stock Exchange (ZSE).
The development, approved at an extraordinary general meeting, means the company’s issued ordinary share capital of 98,48 million shares increases to 984,84 million shares of $0,001 each while the 73, 06 million issued class A shares will be split into 730,69 million shares.
Econet says while the share split will not have any impact on the company's market capitalisation, it will allow investors to trade each split share at a tenth of the current market price of the company’s shares.
The share split followed a study by the company, which showed that the shares were now so expensive that only foreign investors were now buying shares. The level of foreign ownership in the company has shot up to more than 30 percent from 10 percen at listing in 1998.
Econet still has thousands of small investors, but the founder of the company, Strive Masiyiwa, was apparently concerned that small investors no longer dominate share activity, and he has personally pushed for the change.
At listing in 1998, small investors were the majority of shareholders in Econet. However, as the price has risen due to the company’s growth, small shareholders have gradually been squeezed out by large foreign investors and fund managers.
“Econet believes that the share split will not only allow more small investors to buy or increase the number of Econet shares they own, but will also make shareholders in a fast growing company and in which they will over time benefit from the growth in shares,” the company said.
“The public shareholders of the company are numerous, with many ordinary shareholders seeking to buy shares in the company. This share split will open up investment in Econet to more ordinary investors who had been unable to take part due to the high prices,” says Econet.
Meanwhile Econet Wireless customers will soon be able to borrow money from a facility set up at TN Bank to enable them buy high end smartphones and tablets.
Customers will be able to upgrade their phones, which they can get from Econet Shops.
Under the scheme, up to 25,000 phones and tablets will be financed each month.
Econet decided to start the scheme after realising that many of its customers were not enjoying the full capability of its 3G and WiMax services because their phones were not of the correct standard.
The company, which has more than three million customers connected on its mobile broadband system, wants them to use internet services more.
Due to its strong balance sheet, Econet is able to extend loans to its customers, but it needs a bank as an intermediary.
In terms of the scheme which is being finalised with TN Bank - now owned by Econet Wireless - any Econet customer can apply for a small loan to buy a phone.
If approved by the bank, the customer can pay for the phone in 24 monthly instalments. The interest rates will also be lower than those charged by local banks.
The scheme will primarily reward customers who are heavy users of Econet and those who have been loyal users for a long time, as these will get the most amounts of money when they apply for loans.