Econet shareholders to get US$20m

after declaring a cumulative US11,8c dividend for the six months ended August 31, 2011.
The US11,8c dividend represents a cover of 3,7 times, dividend yield of 6 percent and an attractive annualised yield of 22 percent.
The mobile operator had 169 437 285 shares in issue as of yesterday, although the number of Class A shares belonging to founder Mr Strive Masiyiwa could not be ascertained.

The dividend would be paid in four tranches, with the first payment expected next month and the last payout in February next year.
In the interim, Econet turned over US$290,9 million to post a profit after-tax of US$74 million compared with US$64,3 million last year.
Earnings per share for the group closed the six months at US$0,44 up from US$0,38 recorded during the comparable period.

Econet’s profitability bears testimony that investors are no longer looking at short-term investments in price appreciation but the performance and profitability of the company throughout.
Investors have shifted to earning dividends. They now prefer to be paid a dividend rather than selling off their shares when the price appreciates.
Buying of shares is now based on fundamentals, which drive the performance of the company.

There is a clear indication from the market that companies are prepared to pay a premium and a big one indeed – if they recapitalise and operate profitably. But less than 10 companies have declared a dividend since dollarisation in 2009 as they struggle to make profits due to serious shortages and the cost of financing.
During the six months Econet improved its debt-to-equity ratio to 68 percent compared with 86 percent as at February 28, 2011 as interest cover was 10,9 times, signifying the group’s ample capacity to service its loan obligations.

The group’s total liabilities stood at US$355,5 million against total assets valued at US$669,1 million.
Econet is one of the companies which has heavily invested in its capital projects, investing almost half a billion dollars since the introduction of the multiple- currency system.

Company chairman Mr Tawanda Nyambirai said “going forward” the company would focus more on enhancing its network capacity to improve quality of service.
As part of this programme, 60 new high capacity base stations were deployed in the major cities.

Econet has also contributed about US$43,6 million towards the fiscus in terms of corporate taxes, levies and other statutory payments to Government.
The company is now sitting on 5,6 million subscribers, representing a 40 percent growth since the subscriber registration deadline. About 1,4 million subscribers were disconnected by the registration deadline.

 

 

With Internet penetration in Zimbabwe growing steadily, the company sees bright future prospects after data and short message service revenue contributed about 13 percent of the total revenue earned during the six months.
The company’s share price is hovering around US$4 and the market says its actual price should be US$6,50.