from MARCUS MUSHONGA in Harare, Zimbabwe
Zimbabwe Bureau
HARARE, (CAJ News) – THE Econet Group discloses that the combined net asset value for its entities listed on the Zimbabwe Stock Exchange (ZSE) has shrunk by almost half to US$450 million since a demerger in 2018 culminated in the entities’ separate listing.
Net asset value has declined from over US$810 million pre-transaction.
This restructuring had seen Econet Wireless and Cassava SmarTech Zimbabwe Limited separately listed on the bourse, before the latter was renamed EcoCash Holdings.
Econet Group had reported the main rationale of the transaction was to restructure the Group to create a greater focus in the growing financial technology space while separating out the more mature telecommunication business.
In an update to shareholders, officials said both business units but particularly EcoCash Holdings experienced sustained headwinds as standalone companies, emanating from unforeseen negative macroeconomic conditions.
“This unfortunate development negated shareholder value at both the parent company and at the operating entity level,” James Myers, Chairman of the Econet Wireless Board, stated.
He stated in addition to the declining net asset value, liquidity on the stock exchange for EcoCash Holdings had thinned from a normalized daily average of US$108 000 in the first year of trading, down to US$61 000.
“Having assessed the impact of the environment on the EcoCash Holdings operations, and in an effort to preserve value, the Board decided to reorganise the business,” Myers stated.
The proposed restructuring involves the transfer to Econet Wireless, of EcoCash Limited (NB: This is an entity of EcoCash Holdings, just to avoid mixup in the names), VAYA Technologies Zimbabwe, Econet Insurance, Econet Life, MARS Zimbabwe and Maisha Health Fund.
These will be transferred from EcoCash Holdings.
In exchange, EcoCash Holdings will get some Econet Wireless shares for distribution to its shareholders. Steward Bank will remain under EcoCash Holdings.
The envisaged scheme of reconstruction will not result in the delisting of EcoCash Holdings or Econet Wireless.
Myers said post the re-organisation, the consolidated business would streamline a number of activities with a view to regaining the lost customer market share, enhance revenue generation and improve profitability.
“Once the key drivers are repositioned, this should lead to recovery of the market capitalisation for the business. There are a lot of synergies to be gained by the reorganisation of the business,” Myers said.
Econet Wireless is the biggest mobile operator in Zimbabwe, with over 14,9 million customers and over 80 percent market share of mobile internet and data traffic in the country.
– CAJ News