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‘EcoCash to drive Econet’s revenue’

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Financial analysts have predicted that Econet Wireless Zimbabwe’s mobile money transfer service EcoCash will contribute a weighty 7 percent to revenue .IH Securities predicted that EcoCash has potential to bring low cost financial solutions to Zimbabweans either excluded or priced out of the formal banking system.

The securities company has forecast Econet’s revenue to jump 4,6 percent in 2015 to $787 million on the back of significant projected growth in Ecocash’ revenue.

“EcoCash is a product with significant capacity to bring low cost financial solutions to many Zimbabweans either excluded from or priced out of the banking sector. A worsening macro-economy means that part of this population is on the rise,” IH said.

Already, Ecocash has demonstrated its potential to leverage growth in top-line after its revenue contribution in the year to February came in 10 percent ahead of IH Securities’ expectation, at $33,4 million, which was 5 percent of the $753 million 2014 top-line. The agency network of EcoCash continues to expand, currently at 10 000 agents across the country. Econet has also opened a total of 1 million EcoCashSave accounts, testimony of the platform’s capacity to facilitate transactions and also mobilise funds.

The number of EcoCash subscribers rose 67 percent to 3,5 million, 7 percent lower than the analysts projection of 3,8 million mobile money transfer customers.

IH said while many companies were experiencing a decrease in the top-line, Econet was well positioned to whither the storm of the difficult environment through innovation.

“On the back of the expanding product range and expanding agency network, we forecast a 7 percent contribution to revenue from EcoCash in 2015,” said IH.

The potential upside for data revenues is also significant, IH said, as cheaper devices and more cost effective communication applications are developed. The phenomena serve to increase the attractiveness of data usage for the average Zimbabwean.

Data subscription and revenue growth was in line with expectations on 31 percent subscriber growth to 4,2 million and 62 percent revenue growth to $72 million, representing 10 percent of total revenue in 2014.

Analysts however noted that increased data penetration brings with it some threats, as lower costs forms of communication further threaten voice revenues.

Voice, sms, Interconnect and roaming revenue declined 1,76 percent to $595 million in the full year to February 2014 on promotional activity and increased use of data backed applications for communication.

A key strategic issue in data is therefore the data bundle structures and pricing, with management working on products to complement the applications, IH said.

IH has therefore forecast data to rise to 11,5 percent of revenues in 2015.

Econet after tax profit was down 16 percent at $119 million in the year to February on stagnating revenue from voice, sms, interconnect and roaming service revenue.

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