ECONOMIC & MARKET INTELLIGENCE: Data providers primed for earnings boost

13

FOLLOWING the unbundling of the Econet Group into two separate entities (Econet Wireless Zimbabwe and Cassava Smartech Zimbabwe Limited), there has been misapprehension amongst most analysts that Econet Wireless Zimbabwe might have lost its lustre.
This could have been triggered by the fact that the cash-generating mobile money business (Ecocash) is now housed in Cassava Smartech Zimbabwe along all other interesting smart digital technologies like Vaya and Ownai.
Econet Wireless Zimbabwe is primarily focused on the voice and data business. Whilst it is a fact that voice revenues have been on a downward trajectory (in real terms) and margins have been under pressures due to (i) regulations and controls on tariffs and (ii) increased voice penetration levels in Zimbabwe, the same cannot be said of the data business.
One has to look at two important trends when evaluating the data business. First is the demographic profile of Zimbabwe. From a broader African context, the continent has a bottom-heavy demographic profile which implies a youthful population. Approximately 60 percent of the entire continent is aged below 25, making it the youngest continent in the world (the United Nations defines youth as people aged 15 to 24 years). By 2030, it is predicted that the number of youths in Africa will have increased by 42 percent.

Secondly, mobile Internet penetration remains low in Africa and exhibits growth potential in the future. According to GSMA Intelligence, there were 456 million unique mobile subscribers in Sub-Saharan Africa by the end of 2018 — an increase of 20 million over the previous year and representing a subscriber penetration rate of 44 percent.