Econet Wireless Zimbabwe, telecommunications company seeking to the authorities in Zimbabwe for the permission to take payments of its products in foreign currency. The company is expecting to enhance its business more digitally than being communications provider therefore there is a high demand for foreign currency from its operators which drives the company to seek the permit.
Early March 2020, Zimbabwean government Statutory Instrument (SI) 85 of 2020, allows the use of foreign currency for local transactions as a solution for money shortages hence allowing the circulation of money in the country through foreign currencies. This has become a breakthrough in businesses, this has reduced foreign exchange risks, on the other hand, the use of foreign currency for local transactions has led to stability from the re-introduction of the Reserve Bank of Zimbabwe (RBZ) foreign exchange auction system on 23 June 2020.
On the group’s financial for the half-year ended 31 August 2020, by the chairman of Econet, Dr James Myers saying that Econet will continue to pursue opportunities to receive payment of some products and services in foreign currency, Also added that the group is looking for global trends to change from being communications to the digital services provider. Also added that the group is looking for global trends to change from being communications to digital services provider, as they are expecting to embrace the fourth industrial revolution, where adopting the technology is the best way of operating their business.
The ability of the group to transform its business and adopt new technologies has been demonstrated as a technology was evolved in communications, thus changing from GPRS (2G), 3G, 4G (LTE) and now 5G. It, therefore, means the company is continuing to explore new techniques as resembled by the local conditions and also global technological trends. However, the Econet company’s strategy to change from communications service provider to digital services is likely to be a great move, as the has adapted to the changes in their operating environment for over 20 years and its products and services are flowing.
The net foreign currency position of the group remains positive as a result of the equity holding of the company in Liquid Telecommunications Holdings Limited, valued at US$ 135 million. Meanwhile, earnings before interest, tax, depreciation and amortization (EBITDA) increased by 6,7% to $4,8 billion compared to $4,5 billion during the same period in 2019. The business continues to generate adequate cash flows on the back of an EBITDA margin of 47 %, possibly gained due to strict cost management policies in the business.
The use of foreign currency for local transactions was permitted in Zimbabwe, due to several factors, includes economic instability, shortage of money, therefore the use of foreign currency was allowed to stabilize cash crisis. Since the Econet company needs foreign currency to pay for the infrastructure and service upgrades as well as licensing fees, maybe the government will give them permission.