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Econet rules the roost

Dumisani Ndlela

A HEFTY dividend pay-out amounting to $753 million, plus $1 billion expended on a share buy-back has raised the question: is there a money printing machi

ne at the Zimbabwe Stock Exchange (ZSE)-listed telecommunications giant, Econet Wireless Holdings?

Econet has certainly become the envy of highly geared firms battling to escape indebtedness under the current high interest rate regime, and obviously an unkind swank to a large number of firms rushing for cheap funds under a central bank facility meant to bail out struggling firms failing to enhance productivity because of lack of cash.

The group showed it ruled the roost as a cash-spinning business on the equities market when it last week released financial results for the six months to August 2006, the first since the group changed its year-end from June to February.

Cash at hand during the period amounted to $5 billion.

Revenue increased 52% to $14,8 billion in inflation-adjusted terms, driven primarily by an increase in subscribers and airtime usage by its customers.

The results showed that the company had significantly lowered its dependence on income from its cellular operations which previously accounted for up to 90% of its revenue. Investments and effective treasury management of its cash resources accounted for nearly 20% of the earnings.

Econet Wireless chief executive officer, Douglas Mboweni, said Econet’s interim results had for the first time been in the black on an inflation- adjusted reporting basis. This was particularly remarkable given that the company only increased its tariffs once by 202% in the 12 months, even as inflation raged at over 1 000% per annum, he said.

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