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Cost cutting pays off for Zimbabwe's Econet

By , Journalist
Zimbabwe , 25 Aug 2015

Cost cutting pays off for Zimbabwe's Econet

Cost cutting measures implemented by Econet Wireless have started to pay off claim executives at Zimbabwe's biggest telecommunications company.

The measures are said to have restored stability to the company's cost structure which had become disproportionate after the government ordered a tariff reduction early this year.

Revenue has been under pressure because of increased uptake of instant messaging applications and social media, as well as growing instability and job losses in the economy.

Zimbabwean telcos say platforms and applications such as Facebook, WhatsApp, Viber and Skype, that ride on internet connectivity, have stifled the disruptive competition potential of mobile telephony services.

However, companies are now beginning to integrate these and all mobile operators now offer Facebook and WhatsApp bundles.

"We have cut costs by almost $70 míllion to date and restored strength and stability to our cost structure," said Douglas Mboweni, chief executive officer of Econet Wireless.

Costs in Zimbabwe have ballooned say company executives, amid difficult economic conditions which have forced companies like Econet to take knocks on their revenue generating capacity and profit margins.

"We operate as a subsidiary of an international company, and we try to meet international standards of performance and service set by our head office in South Africa," Mboweni added.

Econet had instituted a 20% salary cut for its workers and asked suppliers to cut their prices by as much as 15% to manage the cost structure.

Some local economists say Zimbabwe's economy is overpriced, especially considering that it is using the US Dollar as the anchor within the multiple currency system in place.

"These salary cuts and price reductions are a form of self-correction. Our salaries and prices, as a country, are high and we need to correct that," said economist Moses Moyo.

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