ECONET Wireless reported a circa 23% growth in real-dollar revenue in the financial year 2025, largely driven by a 36% increase in data services and a 23% rise in voice services.
Significant capital expenditure in the second half of the year resulted in substantial investment in its mobile network infrastructure.
The mobile money platform business also performed strongly in the second half, owing to higher transaction volumes and an increase in the average transaction value, coinciding with the rise in aggregate transactions a few months after the introduction of the Zimbabwe Gold (ZiG).
The earnings before interest, taxes, depreciation, and amortisation margin were slightly weaker due to the impact of reacquiring low-margin businesses from EcoCash Holdings and stagnant ZiG prices.
However, this was offset by a 60% decline in exchange losses. Consequently, the bottom line surged to circa US$4,23 per share.
Capex and returns to shareholders
Operating cash flows more than doubled to almost US$300 million after the maturity of the debentures, with an estimated 60% of these inflows in USD. These funds were key to network upgrades, share buybacks, and dividend pay-outs. The group declared and paid a total of US$1,76 per share in dividends throughout the year.
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Changing preferences, skewed towards data services amid capex, are likely to sustain Econet’s revenue growth in mobile network operations throughout 2025. Additionally, persistent struggles among competitors reinforce its continued dominance.
While we appreciate the synergies between mobile money and mobile network operations, we expect the mobile money platform to face challenges in maintaining momentum due to strong competition and tight monetary policy.
That said, the group’s bottom line and net margin should continue improving, supported by waning exchange losses driven by a stable ZiG.
Valuation
We have revised Econet’s financial year 2026 price target upwards to US$25,75, primarily due to expectations of better margins. Regional and global peers were used to generate forward-looking multiples, adjusted for differences in country risk.
Econet remains significantly undervalued at current prices, and we recommend investors take long positions in the stock. BUY.
Investment thesis
Changing preferences in the technology, media, and telecommunications sector have led to more customers opting for data-based calls over traditional voice calls. Econet, in particular, has seen double-digit growth in this segment, supported by an increase in the group’s USD revenue share to circa 60%, enabling further infrastructure investment alongside quarterly USD dividend pay-outs.
Additionally, persistent struggles among competitors reinforce Econet’s dominance, at least in the short to medium term. While we note Starlink’s penetration in the country, the inherent mobility of Econet’s services will limit the satellite provider’s ability to significantly erode its market share.
Although we recognise the synergies between EcoCash and Econet’s mobile network operations, we expect the platform to face headwinds due to InnBucks’ inroads and tight monetary policy throughout 2025.
Nevertheless, the group’s bottom line should continue rising, supported by declining exchange losses amid a stable ZiG.
- This article was written by Morgan & Co, a securities firm for a new era, whose local knowledge and expertise is twinned with international experience to grow the Zimbabwean capital markets.
