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Tuesday, Oct 22nd

Investors still keen on Econet, despite stock decline

Investors still keen on Econet, despite stock decline.

Investors have continued to show interest in Econet Wireless' stock on the Zimbabwe Stock Exchange (ZSE) despite weakening fundamentals and declining economic activity worsened by liquidity constraints.

The strong investor interest in Econet Wireless is in line with the growth of the telecom industry. However, mobile companies, including Econet, have reported declining profitability and low average revenue per user numbers.

Lloyd Mlotshwa, research analyst IH Group said this week that Econet was the biggest contributor to total trade values and volumes on the ZSE during the month of February. He said in a market note that average daily trades for the month came in at $749 000.

"Econet, (and South Africa owned beer brewers) Delta and Afdis made the biggest contribution to total value traded, contributing 40%, 35% and 6% respectively," said the research note.

However, despite investors showing interest in Econet, the company's share price was 1.78% weaker, which weighed down the industrial Index by 3.44% to 99.50 points. Econet Wireless has over 8 million registered subscribers on its network and about 5 million mobile money users on its EcoCash platform.

Market traders on the ZSE said on Monday that they expected the strong interest in Econet Wireless to persist. This would be underpinned by positive sentiment that the telecom industry is a strong growth sector.

As one trader explained, "The other sectors will face growth problems but telecoms is seen as a growth area and Econet has taken measures to correct declining revenues and profitability. It has moved in to cut costs and is giving more attention to growing its revenue streams through data enhancement and tapping more into other value added platforms."


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