Maravi

(HERALD) Econet shares surge

Econet shares surge
Business Reporter

MOBILE phone operator Econet Wireless Zimbabwe’s share price jumped US40c on Monday to close at US539,99c on the Zimbabwe Stock Exchange after the firm posted a record US$113 million after-tax profit for the full year to February 2010.

The blue chip counter helped the Zimbabwe Stock Exchange mainstream industrial index recover from Friday loses to open the week 2,64 percent strong to close at 135.02 points in thin trading. A paltry 6 518 840 shares worth US$727 689,27 exchanged hands on the market.

Econet released the strongest financials on the ZSE after generating US$362,8 million from its four million subscribers.

Profit after tax for the period topped US$133 209 756 and basic earnings per share stood at US66c.

Econet shares will drive the market until the end of May as investors jostle to benefit from the US14c cumulative dividend.

For the first six months of the year Econet had declared a US8c dividend and they have announced an additional US6c to give a total of US14c.

One analyst said, "Econet’s results are a clear indication that not all sectors are failing to take off in this new economic (US$ trading) environment.

"The group not only increased subscribers by over 100 percent but also saw a 76 percent increase in profits."

The group’s aggressive network expansion drive saw their total assets grow from US$182 million to US$397 million as property plant and equipment increased US$137,4 million to US$267,5 million and equipment deposits surged from US$2,2 million to US$47,7 million.

Shareholder funds grew by 86 percent to US$165,5 million despite the company’s debt sitting at $143,2 million.

They closed the year cash positive to the tune of US$13,9 million leading them to declare a dividend of US6c per share.

Company chairman, Mr Tawanda Nyambirai said the company was planning to invest US$300 million in the next financial year - a move that will give impetus to Econet shares.

Intentions to raise a further US$300 million were briefly announced though with very little detail as to which route to take. With their forecast revenues of US$50m plus per month, they will easily settle these debts without disturbing their cash flow significantly.

Their plans are that 25 percent of the funds will go towards data infrastructure development while the rest goes towards improving voice infrastructure.

Mr Nyambirai added that US$63 million, representing 17 percent of revenue was distributed to Government in the form of taxes and levies.

During the period, US$244,5 million representing 68 percent of revenue was reinvested into the business to fund long-term assets and working capital expenditure while 13 percent was paid to financiers.

Mr Nyambira said telecommunications is a key contributor to economic development and largely as a result of Econet’s investment the country’s penetration rate has increased from 15 percent to 40 percent.

Econet Wireless Zimbabwe, which is currently sitting on a market capitalisation of US$884 million, controls 70 percent of the mobile phone industry.

Meanwhile the industrial index rebounded with a 2,64 percent gain at 135.02 points in thin trading.

Seed manufacturing firm, Seedco rose US11,10 cents to trade at US78,10 cents. BAT and Natfoods went up US10c each to close at US240c and US115c respectively as Star Africa put on US0,50c to US7,50c

Spirits manufacturer Afdis went down US3c to close at US12c and Innscor was a cent lower at US60c whilst Dairibord retreated US0.50c to close at US7c.

Aico Africa ended down US0,30c to US17,20c as African Sun retreated US0,05c to close at US3,75c.

The mining index lost 1,56 percent to close at 182,25 points due to Falgold, which shed US2c to US4c and Riozim that eased a cent to US299c.

Labels: ECONET, ITC, ZIMBABWE STOCK EXCHANGE

posted by MrK @ 8:31 PM