By Oliver Kazunga
ECONET Wireless Zimbabwe says it incurred ZWL$1,9 billion in foreign exchange losses in the half year ended August 31, 2019 due to depreciation of local currency.
In a statement accompanying the group’s financial results for the period under review, chairman Dr James Myers said despite the foreign exchange losses incurred, the group’s net foreign exchange position remained sound due to investments in Liquid Telecoms.
“The group’s results for the period under review were significantly weighed down by the accelerated depreciation of the local currency. As a result of outstanding foreign currency obligations, the group recorded foreign exchange losses of ZWL$1,9 billion,” he said.
“The net foreign currency position of the group is positive due to the investment in Liquid Telecoms. The group has been able to manage its relationships to obtain credit from its vendors at a time when it would have been impossible for the business to continue operating without this support.”
Econet’s investment in Liquid Telecoms, which amounted to US$135 million at the time of the transaction, has been accounted for with a fair value adjustment of ZWL$1,1 billion that has been processed through the statement of other comprehensive income, Dr Myers said.
“All US dollar amortising debt that the group had was extinguished using funds raised through a Rights Offer in 2017,” he said.
Dr Myers said the existing obligations relate to vendor credit, which is secured against the equipment provided by the vendors.
He said Econet’s revenue for the half year under review amounted to ZWL$1,3 billion. Dr Myers said management implemented appropriate cost efficiency strategies in light of the deteriorating economic environment. The group owns about 20 percent of Cassava Smartech Zimbabwe Limited, which is separately listed on the Zimbabwe Stock Exchange.
“The equity accounted earnings of ZWL$22,7 million are reported in these results. The current valuation of this holding is ZWL$777 million as at August 31, 2019, representing value that is embedded in the business,” he said.
On the outlook, Dr Myers said his organisation remains confident on the prospects of the business and its capability to remain resilient in the wake of challenges the business faces.
“The robust business model that we have developed has shown its resilience over time. The strength and resilience of the business has been demonstrated over the years.
“We remain confident in the prospects of the business and its ability to withstand the challenges that confront us,” he said.
“We continue to place emphasis on creating sustainable long-term solutions and we hope and trust that the policy thrust from the authorities will be anchored on creating a sustainable business environment.” The Chronicle