Analysts have projected data and internet to drive telecoms giant Econet’s business post unbundling as full-year revenue for the financial year 2019 is expected to hit $678 million mark. This will represent a 20 percent jump ahead of $578 recorded in FY18.
After becoming a fully converged telecommunications, media and technology business encompassing digital banking, payment solutions, broadcasting and insurance among others, Econet spun off its fintech service division — Cassava SmarTech Zimbabwe before it subsequently listed on the Zimbabwe Stock Exchange (ZSE) in December last year.
This was to allow the group to increase strategic focus on its high- growth segment and unlock shareholder value.
Market watchers contend that while the telecoms firm remains a dominant player in the sector, data and internet services will play a key role in the company’s earnings and growth prospects.
This will be driven by increased social media usage, Harare brokerage firm, IH Securities has guided.
Already, regulator, Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) has projected further growth in data and internet revenue, which should further help the telecoms sector’s performance going forward.
This comes as services across sectors of the economy are fast becoming more online-based, as the market seek convenience and efficiency as opposed to the traditional methods.
For Econet, which is the largest telecoms firm in Zimbabwe by assets and value, it has enjoyed dominance in the sector in its respective spheres accounting for over 70 percent national data traffic share and national voice traffic as well as over 85 percent of national payments during the first half of financial year 2019.
Increased social media activity and growth in smartphone penetration is also expected to bode well for the telecom giant’s business.
“We expect the launch of Econet’s media business (in partnership with Econet Media Limited) to provide streaming services and international content under the Kwese brand to yield further exponential growth in the data segment going forward,” said Harare brokerage firm IH Securities.
By end of last year, Kwese Iflix, had attracted over six million subscribers which contributed to the group’s data revenue and expected to experience further growth going forward.
In light of this, net income is seen jumping 31 percent to $162 million while basic earnings per share should remain flat.
Earnings before interest, tax, depreciation and amortisation (EBITDA) is projected to grow 33 percent to $289 million from $237 million in the prior year.
IH Securities maintains despite the demerger, the group will remain a market force based on its strong capital base and other strategic growth areas of focus.
“We expect momentum in Econet’s run-rates to continue in FY19 as the de-merger of Cassava will in our view increase the strategic focus in Econet’s other potential high-growth segments.
“Thus, we project revenue in MNO silo for FY19 to be up +21 percent year on year to $698,4 million and EBITDA to surge +22 percent year on year to $289,8 million, with the EBITDA margin remaining sturdy at 41 percent from similar figure in FY18. We have incorporated 20 percent of Cassava’s forecasted earnings as equity accounted earnings in our projections,” said IH securities.