ECONET WIRELESS ZIMBABWE LIMITED
Abridged consolidated financial statements
for the year ended
28 February 2023
DIGITAL
TRANSFORMATION
FIRST 5G MOBILE
NETWORK
RELIABLE VOICE
SERVICE
Econet Wireless Zimbabwe Limited - Abridged Consolidated Financial Results
We relentlessly offer
solutions that bridge the digital divide across the country
ECONET WIRELESS ZIMBABWE LIMITED
(Incorporated in Zimbabwe on 4 August 1998 under Company registration number 7548/98) ZSE alpha code: ECO ISIN: ZW 000 901 212 2
Registered office
Econet Park, 2 Old Mutare Road, Msasa, Harare, Zimbabwe Telephone: +263 242 486124-5, +263 772 793 700, Fax:+263 242 486183
E-mail: info@econet.co.zw,
Website: www.econet.co.zw
TIP-OFFS ANONYMOUS
Deloitte & Touche
Telephone: | 0808 5500 |
Address: The Call Centre | |
Freepost: | P.O. Box HG 883, Highlands, Harare, Zimbabwe |
E-mail: | econetzw@tip-offs.com |
Financial highlights
Inflation adjusted
EBITDA | STATUTORY PAYMENTS |
7% | 256% | |||
from ZW$ 147 billion (2022) to | from ZW$25 billion (2022) to | |||
ZW$137 billion | ZW$ 89 billion | |||
VOICE USAGE | ||||
19% | ||||
DATA USAGE | ||||
58% | DIGITAL | |||
TRANSFORMATION | ||||
FIRST 5G MOBILE | ||||
NETWORK | ||||
RELIABLE | ||||
VOICE | ||||
SERVICE |
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ECONET WIRELESS ZIMBABWE LIMITED - Abridged Consolidated Financial Results
Chairman's statement
- We are the only network certified to support Apple devices. Our 5G and network modernization rollout plan will increase access to newer technologies such as virtual, augmented, and mixed reality, ultra-high-definition video (UHD) streaming, Internet
of Things (IoT) and Artificial Intelligence (AI). "
customers to our digital ecosystem and our partner services as well. All digital ID subscribers will have greater ability to do more self-service activities on our group platforms.
As we continued to drive digitalisation and digital adoption in line with our digital service provider
Financial review
The financial review is based on inflation adjusted financial statements which are the primary financial statements. Historical cost financial statements have been presented as supplementary information. In order to comply with International Accounting Standard 29 - "Financial Reporting in
Introduction
Our business supports the growing demand for digital services in line with our strategic intent to become a fully-fledged Digital Services Provider. Digital services and next-generation connectivity have become central to people's livelihoods. As a result, globally, the telecommunications sector is increasingly leveraging on emerging technologies for hyper-connectivity, cybersecurity, cloud computing and artificial intelligence to fulfil these fast changing customer demands. Econet Wireless is not left behind in adopting these technologies to fulfil our vision of a digitally connected future that leaves no African behind.
Environment and regulatory review
secure the various network elements that are being targeted.
Operations review
In order to stay abreast of technological advancements and better serve our customers, we added twelve (12) 5G base stations during the year. We remain the only network in the country with 5G technology. We are the only network certified to support Apple devices. Our 5G and network modernization rollout plan will increase access to newer technologies such as virtual, augmented, and mixed reality, ultra-high-definition video (UHD) streaming, Internet of Things (IoT) and Artificial Intelligence (AI).
(DSP) strategy, the business continued to promote self-help and self-care platforms for the convenience of customers. We re-launched an enhanced Yamurai (WhatsApp Bot) and increased our capacity self-care and social media platforms. Our contact centre also adopted a new automatic call distribution (ACD) system, which enables us to handle more customers efficiently and effectively.
Tariffs
Charges applicable to all mobile network services provided by the business are regulated by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) based on sector specific economic models. The business acknowledges the various interventions that the Regulator has granted the sector in a bid to align operating costs with revenue generating activities.
Hyperinflationary Economies" in the preparation of its consolidated financial statements, the Group estimated and applied inflation rates for February 2023 based on the Total Consumption Poverty Line published by ZIMSTAT. The estimation of the consumer price index is permitted by IAS 29 where a general consumer price index is not readily available. The Directors caution users of the financial statements on the usefulness of these reported financial statements, considering distortions that arise when reporting in a hyperinflationary economy.
Group revenue recorded a 20% rise driven by growth in voice and data usage of 19% and 58%, respectively. The Regulator granted the sector three tariff adjustments of 61% each and a fourth adjustment of 50% during the year. The
Providing quality services, which not only meet but exceed our customer expectations is at the core of our endeavours. Whilst concerted efforts were made to meet these standards, our efforts were continuously hampered by extensive load shedding on the national power grid. For the period under review, load shedding averaged 18 hours a day. Consequently, the business resorted to alternative sources of energy to power the network. This significantly increased our cost of providing services to our customers.
The business also experienced vandalism on our critical network infrastructure. To reduce vandalism on our network equipment, the business instituted various monitoring and deterrent measures to
To meet the growing demand for both voice and data traffic, we commissioned eighty (80) new base stations providing additional coverage and capacity. We commenced the deployment of a new modern core network with new generation cloud capabilities. As part of this network modernization effort, we also deployed state of the art data center infrastructure to ensure high availability of the network.
We have started deploying a new digital Know Your Customer (KYC) platform on a phased approach. The platform leverages on digital identification and will centralize group KYC capabilities, distribution, and other partner management services. This shared service enables convenient access for our
However, tariffs continue to fall behind inflation because of rapid changes in the macro-economic environment. This disparity occurs because tariffs for the sector are determined in the local currency, based on movements in inflation and in the exchange rates. This put significant pressure on operating costs on the backdrop of grid power load shedding challenges. The prevailing tariff environment is a threat to the long-term viability of the local telecoms sector and curtails the ability of the sector to invest appropriately to meet customer demand, thereby undermining the quality of service.
tariff adjustments were not adequate to offset the increase in inflation which closed at 230% in January 2023. Despite the revenue increase on account of usage, the earnings before interest, taxation, depreciation, and amortization (EBITDA) margin decreased from 52% to 40% for the year under review. The disparity between the revenue growth and EBITDA margin is reflective of the sub-economic tariff environment coupled with accelerated exchange rate depreciation.
The local currency lost value by more than 85% during the year under review which had a negative impact on overall profitability. The Group incurred exchange losses of ZWL$77 billion which
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ECONET WIRELESS ZIMBABWE LIMITED - Abridged Consolidated Financial Results
Chairman's statement (continued)
translated to 23% of revenue against a prior year comparative rate of 6% of revenue.
The business invested US$66 million as part of its network modernization program. 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.
Debentures
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. Whilst the Company does generate some foreign currency from its operations, this 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. A circular with further particulars will follow.
Dividend declaration
The Directors resolved not to declare a dividend for the year due to the need to capitalize the network.
Corporate social investment
Our corporate social investment initiatives remain focused on three pillars, education; global health; and rural transformation and sustainable livelihoods.
Through our implementing partner, Higherlife Foundation, we also invested in improving the quality of education by providing training and capacitation programs for educators. As part of efforts to strengthen early childhood development and improve the quality of education for foundation phase learners, we provided literacy and numeracy training to more than 1 300 foundation phase educators across the ten provinces in Zimbabwe. In total, more than 3 400 educators were trained
on foundational learning methodologies, positively impacting 173 600 students.
Through the global health program, we catalyse initiatives and projects to broaden access to affordable, high-quality healthcare for Zimbabwe's most vulnerable populations. Higherlife Foundation is the implementation partner for various projects working closely with the Ministry of Health and Childcare.
Outlook
As we pursue our vision of a digitally connected future that leaves no Zimbabwean behind, we will continue to innovate in order to give a unique digital experience to our customers. The consumption of digital services is expected to continue growing. We have a strong platform to anchor our transition to a fully-fledged digital services provider. Exploiting 4G and 5G network enabled opportunities will be key to keep abreast with emerging global trends and improve service delivery.
Appreciation
On behalf of the Board, I extend my profound gratitude to our valued customers who continued to support the business through this challenging period. I would like to recognise the invaluable support that we continue to receive from our partners. I commend and thank our staff for their contribution, passion, and commitment to the business. To my fellow Board members, allow me to extend my sincere appreciation for your guidance and continued support.
Dr. J. Myers
Chairman of the Board
23 May 2023
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ECONET WIRELESS ZIMBABWE LIMITED - Abridged Consolidated Financial Results
Abridged consolidated statement of profit or loss and other comprehensive income
For the year ended 28 February 2023
INFLATION ADJUSTED | HISTORICAL COST | ||||
All amounts in ZW$ 000 | Note | 2023 | 2022 | 2023 | 2022 |
Continuing operations | |||||
Revenue | 6 | 339 167 367 | 282 151 779 | 267 286 494 | 67 065 626 |
Other income | 4 007 148 | 562 799 | 4 105 623 | 235 114 | |
Share of (loss) / profit of associates | (1 319 750) | 219 714 | 200 272 | 309 419 | |
Direct network and technology operating | |||||
costs | (88 708 134) | (66 770 204) | (73 348 755) | (15 727 266) | |
Other network costs | (22 413 729) | (15 177 711) | (18 340 302) | (3 675 802) | |
Costs of handsets and other accessories | (10 100 319) | (7 241 329) | (7 528 548) | (1 572 381) | |
Marketing and sales expenses | (7 233 774) | (4 271 224) | (5 665 219) | (1 061 701) | |
Impairment of trade receivables | (6 004 348) | (2 190 690) | (5 055 498) | (535 173) | |
Staff costs | (37 298 430) | (24 794 347) | (29 198 517) | (6 004 938) | |
Other expenses | (32 861 215) | (15 496 162) | (27 791 274) | (3 896 998) | |
Profit before interest, taxation, | |||||
depreciation, amortisation, impairment, | |||||
exchange losses and monetary | |||||
adjustment | 137 234 816 | 146 992 625 | 104 664 276 | 35 135 900 | |
Depreciation, amortisation and impairment of | |||||
property, plant and equipment and intangibles | 7 | (59 982 538) | (47 982 221) | (49 724 991) | (8 617 226) |
Other impairments (increase) / reversal | (1 266 446) | 573 019 | (1 266 246) | 363 182 | |
Exchange losses | (77 153 920) | (16 365 692) | (51 939 144) | (4 211 362) | |
Monetary adjustment | 9 354 199 | (12 029 486) | - | - | |
Finance income | 5 511 148 | 2 342 295 | 4 088 301 | 583 555 | |
Finance costs | (7 505 169) | (2 825 913) | (6 677 448) | (674 833) | |
Profit / (loss) before tax from continuing | |||||
operations | 6 192 090 | 70 704 627 | (855 252) | 22 579 216 | |
Income tax expense | (23 190 044) | (29 923 915) | (10 456 965) | (6 900 970) | |
(Loss) / profit for the year from | |||||
continuing operations | (16 997 954) | 40 780 712 | (11 312 217) | 15 678 246 | |
(Loss) / profit after tax from discontinued | |||||
operations | 8 | - | (1 152 859) | - | 13 208 |
(Loss) / profit for the year | (16 997 954) | 39 627 853 | (11 312 217) | 15 691 454 | |
(Loss) / profit for the year attributable to | |||||
Equity holders of the Company | (16 684 879) | 40 100 046 | (11 444 409) | 15 676 076 | |
Non-controlling interest | (313 075) | (472 193) | 132 192 | 15 378 | |
(16 997 954) | 39 627 853 | (11 312 217) | 15 691 454 | ||
Other comprehensive income / (loss) | |||||
Items that will not be reclassified subsequently to | |||||
profit or loss | |||||
Fair value gain on investments in equity | |||||
instruments designated at fair value through | |||||
other comprehensive income, net of tax | 38 237 749 | 6 482 798 | 114 717 464 | 12 659 660 | |
Gain / (loss) on property revaluation, net of | |||||
tax | 185 249 841 | (10 274 865) | 237 677 106 | 6 573 045 | |
Share of other comprehensive income of | |||||
associates | 4 604 427 | 1 180 226 | 6 695 350 | 741 243 | |
228 092 017 | (2 611 841) | 359 089 920 | 19 973 948 |
INFLATION ADJUSTED | HISTORICAL COST | ||||
All amounts in ZW$ 000 | Note | 2023 | 2022 | 2023 | 2022 |
Other comprehensive income / (loss) | |||||
attributable to | |||||
Equity holders of the Company | 228 086 796 | (2 611 841) | 359 073 174 | 19 973 948 | |
Non-controlling interest | 5 221 | - | 16 746 | - | |
228 092 017 | (2 611 841) | 359 089 920 | 19 973 948 | ||
Total profit or loss for the year and other | |||||
comprehensive income / (loss) attributable to | |||||
Equity holders of the Company | 211 401 917 | 37 488 205 | 347 628 765 | 35 650 024 | |
Non-controlling interest | (307 854) | (472 193) | 148 938 | 15 378 | |
211 094 063 | 37 016 012 | 347 777 703 | 35 665 402 | ||
Earnings per share | 10 | ||||
From continuing and discontinued operations | |||||
Basic earnings per share (dollars) | (7.01) | 16.58 | (4.81) | 6.49 | |
Diluted earnings per share (dollars) | (7.01) | 16.58 | (4.81) | 6.49 | |
From continuing operations | |||||
Basic earnings per share (dollars) | (7.01) | 17.06 | (4.81) | 6.48 | |
Diluted earnings per share (dollars) | (7.01) | 17.06 | (4.81) | 6.48 |
IAS 29 discourages the publication of historical cost results as the inflation adjusted results are the primary financial results. However, the historical cost results are included as supplementary information to meet other user requirements. As a result, the auditors have not expressed an opinion on this historical cost information.
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Econet Wireless Zimbabwe Limited published this content on 31 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 May 2023 07:08:39 UTC.