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Strategic and operational overview Douglas Mboweni Chief Executive Officer Financial overview Roy Chimanikire Group Chief Finance Officer Outlook Douglas Mboweni Chief Executive Officer
Operational Highlights
Significant Events
Operating Licence renewed for another 20 years Launch of 4G (LTE) World class call centre technology implemented Launched exciting and innovative products and services that include:
EcoCash Save EcoFarmer
Broadband SMS/MMS
50%
Voice
0% 2013 2017
Source: Infonetics Research, 2G,3G,4G Mobile Services and Subscribers: Voice, SMS, MMS and Boradband Biannual Market Size and forecasts, June 2013
The contribution of voice revenues to mobile operators is expected to decline. Data (broadband) is expected to grow exponentially Overlays are also expected to make a significant contribution
Voice
Data
Overlays
Driving superior customer experience Uniquely tailored solutions to suit all customer segments Continued network investment Corporate solutions Exciting promotions
Improving smartphone penetration to drive data usage through financing packages Reliable high speed internet with the widest coverage Robust infrastructure unparalleled by any other operator Launch of LTE ahead of some European markets
Using overlays to sustain growth Continued development of service offerings that create unique points of differentiation and customer loyalty Leveraging the mobile network to create relevant services in different economic sectors such as Financial Services and Agriculture (e.g EcoFarmer, EcoCash Save).
Market Position
Subscriber growth
Millions
Penetration - Mobile
Tanzania 55% 74% Angola Zambia 86%
14% 12%
Namibia 118%
43% Mozambique
74%
South Africa 135%
Lesotho 63%
Maintained value share and increased revenues Continued focus on high quality and providing a world class service
Strong growth in subscribers across all key product segments Subscriber CAGR:
Voice Data 19% 43%
Market penetration goals achieved for voice services Data and EcoCash penetration present opportunities for growth
Data
Econet launches the first 4G service in Zimbabwe
source: www.itnews.com
Zimbabwe in the Top 5 African countries with the fastest download speeds
source: www.speedtest.net
Customers (millions)
Y-O-Y growth of 52%
Continued growth in the subscriber base and volume of data delivered Fibre connectivity remains a major
3.8
strategic advantage Exciting data bundles launched Competitive pricing, superior speeds and unparalleled coverage
3.2 2.5
Customers (millions)
3.0 2.5 2.0 1.5 1.0 0.5 0.0
Transactions (millions)
Aug - 12
Feb - 13
Aug - 13
Continued high demand and increase in subscribers Over 7,000 agents nationwide System upgraded to cater for higher volumes and transaction capacity per second increased by 20 times
Innovation
Mobile Phone penetration significantly exceeds the percentage of the population with bank accounts. 72% of SME business owners save mainly at home and through informal mechanisms
Source: World Bank funded survey, May 2013
EcoCash Save is a unique mobile phone enabled bank account with the following features: No application forms required Can be opened instantly from the mobile phone No minimum balance required No proof of income No bank charges Funds earn interest Save as little as a dollar a day
Innovation
Leading the innovation path. Driving a superior customer experience LTE launched in Victoria Falls, Bulawayo and Harare Up to ten times faster than 3G.
Unique and exciting packages are available Value for money - With the bigger bundles customers enjoy more data.
Providing timely weather information to farmers Access to agricultural technical assistance via mobile phones Access to crop insurance Networking farming communities Providing market linkages and easy payment for produce through EcoCash
Deploying Green Kiosks countrywide to expand the distribution footprint for Econets products and services Creating employment and business opportunities for start-up SMEs Driving towards a greener future Harnessing renewable energy Creating a safe environment for the future Empowering marginalised communities for future prosperity
Customer focus
Doubled capacity to handle SMS, email and website enquiries Doubled number of call centre agents Launched Avaya Aura contact centre management system - a first of this technology in Africa
Customer focus reinforced through business wide training sessions Improved experience through self-care options such as SMS and interactive voice response system Customer care processes revamped in line with global standards through:
Process mapping Improved client service governance models
Network Infrastructure
The widest voice and data network, and the best quality More people, More places, Connected!
Launch of LTE Continued improvement in coverage Geographical coverage now exceeds 80% Sufficient capacity to handle the 22% increase in subscribers and the over 60% increase in data usage per subscriber
Over 4 500km of fibre laid in Zimbabwe Robust infrastructure and effective resource planning to cater for future growth Now connected to 4 undersea cables: SEACOM, SAT 3, EASSY and WACS
Dynamic discounting
Providing value to customers based on calling patterns Effective use of network resources by stimulating traffic to use idle capacity
Group Highlights
22%
8%
33.4
63.1
36%
85.5
Revenue (US$m)
Revenue Mix
7%
US$1.2 billion EBITDA generated since dollarisation Access to capital through debt structures played a key role in delivering growth Subscriber uptake of 577% since dollarisation and market share acquisition were the main drivers
Voice remains a significant contributor to revenue Data contribution is increasing and is expected to exceed 10% of overall revenue US$13 million contribution to revenue from EcoCash
Revenue Growth
2.6%
2.1%
3.2%
2.9%
377
2.6% growth in voice related revenue streams 3.2% of the growth is attributable to new lines of business Other revenue largely comprises device sales and bottling company revenues ARPU sustained at about US$ 8
Growth in data resulted from: Improved access to data capable devices Customer segmentation and continued improvement in data speeds, coverage and capacity
Costs in Focus
187
205
211
Aug-12
HY Feb-13
Aug-13
Aug-12
Aug-13
Key cost drivers: Network costs IT related costs Marketing and sales costs Customer service costs Licence and USF costs Staff costs EcoCash agent commissions
Investment in new revenue streams resulted in additional recruitment New products required more marketing support Efficiencies achieved in general administration costs
45%
43%
152.8
165.3
Aug-12
HY Feb-13
Aug-13
Aug-10
Aug-11
Aug-12
Aug-13
Earnings
Stable earnings
PAT (US$m) Basic EPS (US cents)
78
62
71
4.6
4.4
4.5
Aug-12
HY Feb-13
Aug-13
Aug-12
HY Feb-13
Aug-13
Capital Investment
CAPEX (US$m)
CAPEX/Revenue (%)
33%
1.2%
63
84
85
19% Aug-12
24%
23%
Aug-12
HY Feb-13
Aug-13
HY Feb-13
Aug-13
Improved 3G footprint and geographical coverage Extensive coverage driving the adoption of Ecocash Investment in infrastructure pillars that support product innovation and an improved customer experience Fibre backhaul improved
244
232
Aug-12
Aug-13
10% Aug-12
11%
12%
9.7
16.3
17.3
HY Feb-13
Aug-13
Aug-12
HY Feb-13
Aug-13
EBITDA margin remains higher than regional operator average Leverage ratio is below regional operator average P/E ratio is the lower than other regional operators
In Conclusion...
Revenue from new overlay services becoming more significant. Investing to create new revenue streams.
Stable margins in the mainstream telecoms business. Investment in new lines of business reduced overall margin.
Emphasis on service quality while keeping up to date with global trends. Investing in new areas of growth. Leveraging debt to create sustainable value whilst managing cash commitments.
Outlook
Original Licence:
The licence was issued for 15 years in July 1998 and was scheduled to expire on the 9th July 2013 The licence stipulated a licence renewal fee of US$100 million
New Licence
The licence period was extended by 20 years The renewal fee was set at US$137.5 million All operators will be required to pay the same licence fee on renewal of their licences Econet has fully paid for its licence
Employment creation - estimated direct and indirect employment by Econet is more than 20,000 jobs Cutting edge innovation - Products such as Buddie Zone, EcoCash, EcoFarmer, Econet Solar etc.
Capital Investment Over US$ 1 billion invested in the economy
Economic contribution -US$815 million paid in various taxes, duties and levies
Financial inclusion Providing access to financial services for the majority of the population that was previously unbanked.
Over US$190 million returned to shareholders since dollarisation through cash dividends and share buybacks.
Conclusion
We will continue to invest in innovative technologies that enrich lives and create a platform for sustainable revenue growth and shareholder value enhancement.
Appendices
Abridged financial statements
Feb-13
706,389 33,563 275,158 1,015,110
Variance (%)
22% 43% -19% 12%
36,984 2,441 524,544 3,870 567,839 118,824 158,040 290,441 567,305 1,135,144
35,697 569 453,139 3,478 492,883 85,493 202,800 233,934 522,227 1,015,110
Aug-13
Cash generated from operations Tax paid Net cash from operating activities Acquisition of property, plant and equipment Other investing activities Cash used in investing activities Cash generated from financing activities (Decrease)/Increase in cash & cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at acquisition of subsidiary Cash & cash equivalents at the end of the year
Aug-12 152,243 (28,584) 123,659 (63,123) (15,628) (78,751) (37,576) 7,332 100,793
Variance (%) 59% 20% 77% -225% 91% -163% -35% -422% -22%
39,940
108,125
-63%
Disclaimer