HARARE: Econet Wireless has added to its huge debt stock after announcing yesterday it will get $300 million of the $500 million loan its parent company, Econet Global, has secured from China Development Bank and ZTE Corporation.
Zimbabwe’s biggest mobile telecommunications company by subscribers and value paid a staggering $21 million towards meeting finance costs for the full year to February 2015. While Econet continues to make significant profits in a market where it dominates and has well over half the 14,2 million population on its expansive network, its revenues and profitability have plateaued with stagnation in the voice segment.
However, the mobile phone network operator has come up with a cocktail of innovative products including mobile money transfer, mobile insurance and data services in a bid to counter the group’s tapering revenue and profits decline. Profit for the half year to August dipped 52 percent to $323 million while group’s revenue took a 17 percent knock to $323 million.
As at the end of the 2015 full year, Econet Wireless reported the group’s total interest bearing loan at $165,7 million, hence high interest paid in the year to February 2015.
But Econet Wireless Zimbabwe chief executive Douglas Mboweni said the loan facility negotiated at group level would help the telecoms giant consolidate its market position, as well as to introduce new products and services.
The country’s biggest telecommunications operator said it will continue to invest heavily in expanding its services, despite having already suck in $1,2 billion to develop its network. “With this investment, we will take our investment to well over $1,5 billion. “This shows our commitment to our country,” Mr Mboweni said in a statement released late yesterday.
He said the loan had been negotiated at group level because that is where the expertise is for this magnitude of funding. “At our group, they have developed a lot of expertise to raise large amounts of money when we need it.”
While the investment will increase the company’s debt stock and regular obligations in terms of interest payment, it will the telecoms consolidate its position in a market it already dominates, while expanding the infrastructure basis on which its host of overlay services will run. Earlier, In 2012 Econet Wireless Group also concluded a $362m loan facility to use in some of its African operations.
The Zimbabwe business, got $255 million from the $307 million to re-finance existing short-term facilities and $52 million to finance equipment purchases for further expansion. The tenor of the facilities was an average of 5 years and the blended rate was LIBOR plus 5,3 percent.
The loan facility was arranged by Afreximbank, and syndicated to development and financial institutions from Germany, France, China, Netherlands, South Africa and Sweden.
