The rise of Econet Wireless Zimbabwe

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OVER the past 20 years, Econet Wireless Zimbabwe Limited ( Econet) has grown from being a start-up to be the most valuable listed company in the country.
With a Zimbabwe Stock Exchange (ZSE) market capitalisation of over $3 billion, the company is ahead of long established corporations like Delta, Innscor and Seed Co — that have been around for way longer.
This comes as the company has established itself as a major player in the country’s movement into the global information age, unlocking the relevance treasure chest.
For a long time, the most valuable companies on the planet have been those that have commanded or watched over cultural evolutions of humanity, most of which have been underpinned by technological advancement.
Apple Incorporation (Apple), the most valuable listed company in the world — with a market capitalisation of about $1 trillion, was one of the two major players — along with Microsoft, in the mainstream adoption of the personal computer. Apple has also played a leading role in the rise of the ‘smart phone’ with its iPhone.
According to Yahoo Finance data for the second quarter of 2018, seven of the ten most valuable listed companies on the planet are technology companies with the top five spots being occupied by technology companies.
World’s richest man Jeff Bezos’ electronic commerce company, Amazon, has the second largest market capitalisation at about $820 billion. Google parent, internet and associated technologies group Alphabet is number three at $770 billion.
Computer software company Microsoft and social media poster child Facebook occupy fourth and fifth with market valuations of $750 billion and $550 billion in that order.
These companies have commanded and built themselves around changes in how people interact with the world and how business is conducted, they have earned the profits of figuring out the incorporation of new technologies into culture.
Likewise, Econet has been on the fore front of the mainstream adoption of telecommunication technologies in Zimbabwe.
The last 20 years have seen the rise of mobile telephony in Zimbabwe in a total recalibration of the country’s telephony landscape.
Before mobile phones, we had a situation where a single fixed line was shared among an entire family, a neighbourhood or even an entire village. Now almost everyone has a mobile phone.
“The total number of active mobile subscriptions as at 31 December 2017 was 14 092 104,” POTRAZ said in its latest report on the local telecommunications sector performance.
This generally accounts for the country’s entire adult population as the World Bank estimates the country’s population at 16 million people.
Econet commands more than half of the 14 million active subscriptions making it the market’s driver.
Econet says its mobile subscriber base has grown from just over 32 thousand at the end of 1998 to a staggering 11 million in the second quarter of 2018.
The latest POTRAZ report shows that as of December 2017, Econet had an 80 percent share of the country’s total voice traffic market.
Econet has also commanded the growth of internet penetration in the country, the company has been the leading player in this space over the last 20 years. POTRAZ puts the total number of active internet subscriptions as at December 31, 2017 at about 7 million of which Econet’s internet infrastructure company Liquid has more than 55 percent market share.
POTRAZ’s report on the industry shows that Liquid owns about 80 percent of the internet infrastructure in the country meaning that any internet usage growth going forward will be on its lap.
Over the past five years, the company has also been the trail blazer in the rapidly developing financial technology industry.
Through its mobile money service EcoCash, Econet has established itself as the biggest single player in the country’s financial services space.
Econet says EcoCash affiliate, Steward Bank is the largest bank in the country by customer base, with more than 600 000 customers representing just over a quarter of the country’s banking population.
Meanwhile, POTRAZ data shows that EcoCash commands more than 95 percent of the country’s mobile money business.
Mobile money has become a major part of the country’s financial system in the face of serious cash shortages. The RBZ says mobile money transactions accounted for almost 75 percent of financial payments completed in 2017.
This means that Econet was involved in more than half of the transactions completed during that year.
“Econet played a critical role in averting the cash crisis through fostering the adoption of cashless payments using its mobile financial services solutions offered through EcoCash and Steward Bank. This has resulted in financial inclusion increasing to over 80 percent of the addressable population.
This has transformed the Zimbabwean financial system into possibly the most digitised financial system in the world,” the company said in a statement accompanying its latest financial results.
Econet is also at the fore front of the emerging micro insurance sub-sector which has been largely mobile telephony driven.
At less than 10 percent insurance penetration, the local insurance industry provides so much room for the emerging business.
Econet has a number of offerings in this space including funeral insurance and third party motor vehicle insurance. Local insurance industry regulator, the Insurance and Pensions Commission (IPEC) says micro insurance through the mobile phone already accounts for a significant portion of insurance penetration in the country and its medium-term penetration growth prospects are based on the potential of micro insurance.
It should be considered however that Econet’s $3 billion valuation is based on its share price on the ZSE which is notoriously overvalued on account of a currency crisis in the country that has sent investors scurrying to the stock market desperate for a hedge.
But it is not so much the number $3 billion that is impressive; it is fact that it is the most valuable company on the market that is exceptional.