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Golden Sibanda : Senior Business Reporter
The country’s biggest mobile phone network, Econet Wireless, has invested over $55 million on alternative sources of power, as the power situation remains critical in Zimbabwe. The group also said the diesel generators alternative is gobbling a staggering $7 million annually in operating costs. Econet said that investment in alternative sources of power was necessitated by unreliable availability of grid power, which it said remains a major challenge for the business.Chairman, Dr James Myers in a statement accompanying the group’s financial results for the year to February 2016 said Econet invested in diesel generators, deep cycle batteries and solar power to mitigate power outages.
“The business has invested over $55 million towards provision of alternative power and incurred an average of $7 million per annum in ongoing operating costs to run diesel generators,” Mr Myers said in the financial statement.
As such, Econet cited a number of constraining factors for continued deteriorating financial performance with revenue falling from $746 million in 2015 to $641 million in 2016.
Group profit for the period under review plunged 43 percent to $40 million from $70 million in the full year to February 2015 weighed down by a cocktail of Government and regulatory changes and or directives.
Econet blamed the 35 percent reduction in voice tariffs and 5 percent excise duty on airtime for depriving the group of $125 million in potential revenue for the year 2016.
Regulator, Potraz’s reduction of interconnection rates from 5 cents to 4 cents and increase of universal services fund levy to 1,5 percent from 0,5 percent, Econet said, negatively affected revenue by $4,5 million this year.
Further, the group said the requirement by Government for all mobile phone subscribers to be registered resulted in de-registration of some customers made the group lose $2 million potential revenue.
Econet said the problem regarding availability and supply of power and other problems it cited are beyond its control, but the company has adjusted its business model to protect key revenue segments and enhance efficiency.
The adjustments included aggressive cost reduction measures, on a scale never implemented by the company in its 16 year history, which included reduction of total gross compensation by 20 percent, retrenchment of over 150 staff and extensive negotiation with suppliers for a 15 percent decrease in costs across all items.
Online Reporter