Econet Zimbabwe’s broadband growth slows, highlights need for service innovation

Nigel Gambanga Avatar
Econet broadband, Mobile Internet

Earlier today Econet Wireless Zimbabwe unveiled its financial results for the year ended 29 February 2016 and the numbers shared by the telecoms operator gave a reflection not only of the group’s performance but also of the challenges faced by telecoms operators.

Voice and SMS revenue were highlighted for their continued decline and issues like regulatory interjections were brought up as impediments for optimal performance.

At the same time, the one area that has been a huge bet for future growth in telecoms – broadband services – hasn’t stayed on the same growth trajectory that brought it front and centre in Econet’s evolution.

In the financial year reviewed, broadband services contributed $113 million to the Econet Wireless Zimbabwe Group revenue total. This is a $10 million increase from the $103 million that it brought to the table a year before.

That increase translates to a 9.7% rise in revenues, which is markedly lower than the 43% growth tip that broadband services were on in the previous year.

When compared to other service lines broadband growth is critical right now. Voice and SMS are slowly being written off and broadband is one of the service lines that has been eyed as the future revenue driver. Its slowdown raises some concerns about Econet’s future growth especially as voice revenue continues to recede.

In some ways the slowdown is understandable. The Zimbabwean macroeconomic environment hasn’t been kind to any sort of business enterprise and consumer services like telecoms are at the mercy of shifts in consumer spending patterns.

The result is that broadband services aren’t as enthusiastically snapped up and their use is limited.

Economics aside, though, Econet and all local mobile operators have to figure out ways to open up mobile broadband services to more subscribers and to trigger data use. Innovation around their “next big thing” has to be a priority.

Beyond just investing in the network infrastructure this means figuring out how to introduce more subscribers to data services through affordable entry-level smartphones while encouraging internet use through competitive broadband prices.

So far mobile internet access in Zimbabwe has been dominated by WhatsApp and Facebook because of the social media bundles created by operators as a way of “monetising” these Over The Top (OTT) services that are slowly rendering voice and SMS services redundant.

While the bundles lead mobile operators’ broadband service lineups, they should be accompanied by a gallery of broadband products that are relevant to subscribers.

There’s still a lot of potential in mobile broadband delivery for the Zimbabwean market. With some innovation, there might be a return to stronger growth numbers in the next year.

You can access the Econet Wireless Zimbabwe results by following this link 

One response

  1. #ZimInvestor

    Once upon a time, a small-time investor was looking to invest his hard-earned money in a local Zimbabwean business. The investor was advised to follow Econet Wireless and tipped to buy stock if the share price fell below 20 cents. As time went by, the stock price crashed from 45 to 35 to 25 to 21 cents. Realising his opportunity was near, the investor began researching the business and was shocked by what he found.
    Following conversations with sources close to the action, the investor soon realised that the privately-owned Econet Group, controlled by Mr. Masiwya, was effectively looting funds from the publicly-traded Econet Wireless Zimbabwe. Apparently, “a team of forensic auditors would have a field day,” he overheard at a local Church event.
    For starters, “look how the Group’s off-shore companies are charging grossly inflated prices for services forced upon the operator and then free-riding off the operator’s back.” After hearing this, he thought, “If I was a shareholder, I would want to know what funds had been stripped from the business to fatten the pockets of its foreign-based and largest shareholder.”
    This small-time investor had a lucky escape. But what about existing and future shareholders? He decided it was his duty to make others aware of these unethical business practices so they could be investigated before the evidence gets covered up. For unlike Mr. Masiwya, who flies over Zimbabwe in his private jet, he knew fellow local investors deserve to hear the truth about conflicts of interest and the abuse of power.