Econet after tax profit down 52pct in H1

Econet after tax profit down 52pct in H1

HARARE, October 15  (The Source) – Econet Wireless Zimbabwe, the country’s largest telecoms operator on Thursday reported a 52 percent decline in after-tax-profit to $23 million for the six months to August on weak aggregate demand and the effects of a government sanctioned voice tariff cut and taxes on airtime sales and mobile handsets.

Government taxes — a five percent excise duty on airtime sales, a 25 percent duty on handsets, and a five cents levy per transaction on mobile money transfers — compounded by a 35 percent voice tariff reduction effected last year has hit the telecommunication sector hard.

This has seen the company institute a number of cost cutting measures including a 20 percent salary cut, demanding a 15 percent price reduction from suppliers and most recently the retrenchment of 100 employees.

“While the regulator anticipated increased usage based on reduced tariffs, the anticipated price elasticity of consumer demand has not materialised, and our revenues have clearly been adversely impacted” the company said in a statement accompanying financial results on Thursday.

Revenue for the six months under review declined by 18 percent to $323 million.

Overlay services revenue at $35,5 million was up 29 percent contributing 11 percent to total group revenue.

Mobile broadband revenue was down 6 percent to $52,3 million while the company’s banking operation Steward registered a profit after tax of $1,9 million from a downturn of $3,7 million in the prior period.

Finance costs were up from $17 million to $21 million incurred in the prior period.

EBITDA was down 21 percent to $122, 5 million.

The company said it will extend business operations in the Mobile Financial Services, Banking, Insurance and E-commerce sectors to cushion it against falling to telecoms revenues.