ECONET Wireless Zimbabwe Limited on Wednesday reported a 41 percent decline in after-tax profit for the year-ended February 2015.
The country’s biggest telecommunications firm said a government-decreed voice tariff cut and taxes on airtime and mobile handsets ate into revenue.
“The introduction of a 5 percent excise duty on airtime sales, a 25 percent duty on handsets, and a 5 cents levy per transaction on mobile money transfers, compounded by a 35 percent voice tariff reduction has negatively affected the viability of the telecommunication sector, which has hitherto been a mainstay of investment, economic vitality, and employment creation in our country,” Econet said.
“The company has had to cut capital expenditure, and stop further employment creation for the first time since it began operations. Econet is one of the largest employers in the country, both directly and indirectly, and is concerned about the job losses that now look to be inevitable.”
After-tax profit for the year was $70,2 million, down from $119,4 million in 2014, although revenue levels largely held at $746,2 million, nearly 1 percent lower than $752,7 million previously.
The firm’s overlay services, mostly anchored on its mobile money services Ecocash, helped arrest the decline in revenue from the tax and tariff measures, these typically carry lower margins.
The overlay services added $72.7 million to revenue during the year, Econet said, a growth of 64.9 percent on the prior year’s contribution. Mobile broadband weighed in with $103 million to revenue, an increase of 42,3 percent on the 2014 figure.
Econet’s debt to equity ratio improved to 36 percent from 38 percent previously following an increase in debt repayments to $98 million compared with $76 million previously. The firm says it is on course to pay off most of its debt within the next three years.
It invested $125,4 million (2014: $281,3 million) on its network, pushing the firm’s total investment above $1,2 billion over the past five years.
The investment in the network allows Econet to accommodate an additional 2 million to its current subscribers, who rose 5 percent to nearly 9,2 million over the year.
The firm said in addition to the government’s tariff and tax measures, the failure of state-owned firms – NetOne and TelOne to settle interconnection debts, which rose to $26,3 million in the year under review, threatened the stability and viability of the telecommunications sector.Advertisement
Econet closed the year with $95 million in cash holdings.