Econet sees data contributing significantly to revenue by 2016

Zimbabwe’s largest mobile phone operator Econet Wireless Zimbabwe sees data and value added services contributing 30 percent of total revenue by 2016, but with low profit margins as consumers migrate to internet based applications, an official said yesterday.

With mobile phone penetration having reached saturation point at over 103 percent, Econet, which has nearly 70 percent of the market share says the increased use of data services, while convenient to users will eat into the company’s profit margins.

The group’s chief customer service officer Stanley Henning however said at the  launch of the company $2.5 million call centre in Graniteside that going forward the telecoms firm will develop new  services and grow volumes to consolidate its market position.

Econet, which is expected to release its half-year results today, reported a 15 percent drop in profit to $119.4 million for the full year to February.

“Two years ago data was less than 10 percent of total revenue, now we are looking at 20 percent for 2015 and 30 percent for 2016. While that is going up, voice which used to contribute 70 percent, has come down to 60 percent and is likely to fall further to 50 percent,” Henning said.

“So value added services, SMS and data are now the  big drivers. Profitability margins on data is dramatically less than voice so our investment is now more because data is growing but the returns are lower. It is one the challenges that we are facing but we have to go with the times and deliver to customers what they want. Going forward, more services will unlock value.”

It its full year financials, revenue was up eight percent to $752.7million, largely driven by the growth in data and Ecocash but income from voice services was flat despite adding 780 000 new subscribers during the year.

The fall in voice revenue, for years the primary driver, has seen after tax profit fall from  $165.7 million in 2012 to $140 million in 2013 and $119.4 million this year.

Broadband revenue grew by 62 percent to $72.4 million while mobile money transfer service EcoCash tripled to $33.4 million. Both services contributed more than 14 percent of the total to offset the slowdown in the short messaging service (SMS), whose share fell to four percent from six percent.-The Source

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