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Econet Zimbabwe to experience falling market share - experts

By , Journalist
Zimbabwe , 04 Oct 2012

Econet Zimbabwe to experience falling market share - experts

Increasing competition from mobile network operator, Telecel Zimbabwe is likely to force a decline in market share for Zimbabwe’s biggest telco, Econet Wireless.

This is according to an analysis report conducted by research and advisory firm, IH Securities.

The firm says that stifled economic activity in Zimbabwe is likely to limit the growth of Average Revenue Per User (ARPUs) for Econet.

“Slowing economic growth and promotion activity on the part of competitors will also limit growth in ARPUs,” says the report.

“ARPUs, which dipped from $9.13 million to $8.55 million in full year 2012 have come under pressure as the subscriber base increasingly includes slow ARPU users through value added services,” notes the report.

As a result, the analysts at IH Securities have forecast earnings before tax margins of 47% in the full year to February 2013 from 47.6% in 2012, mainly as a result of massive network expansion in remote areas and the worsening power situation in Zimbabwe.

Econet has been facing vibrant competition from rival operator, Telecel Zimbabwe, which has now announced plans to list on the Zimbabwe Stock Exchange.

IH Securities head of research and analysis, Dzikamai Danha, said Telecel Zimbabwe has boosted its capacity and seen its market share rise significantly.

“Telecel is becoming increasingly competitive, increasing its market share from 10% in FY10 to 21 % in September 2012,” he said.

However, despite the firming market share by Telecel Zimbabwe, Econet is expected to record growth in subscriber numbers. The analysts have “forecast a 12.5% increase in subscribers to 7.2 million in February 2013” for Econet.

They said relatively flat ARPUs likely to be around $8.5 million “will result in revenue of $690 million and earnings before tax of $326 million” on a 47% margin.

To offset this, Econet is looking to “support” its ARPUs that have been projected to decline “through value added services” and these include data services and EcoCash mobile money transfer which is said to now have 1.7 million users.

However, despite the expected decline in Econet’s market share, Zimbabwe’s overall mobile penetration rate is expected to surge to 85% by February next year.

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