Zimbabwe’s Econet Wireless remains attractive to traders

Zimbabwe’s Econet Wireless remains attractive to traders

Traders on the Zimbabwe Stock Exchange (ZSE) have confirmed a strong interest from foreign investors in Econet Wireless shares.

In July 2017, the Econet counter traded 13% higher and contributed significantly to the 1.55% surge in overall gains for the ZSE to a market capitalisation to US$5.9 billion.

“The market continued on an upward trend in the month of July, gaining a further 1.55% to close the month at a total market capitalisation of $5.98bn. The Industrial Index edged up 3.71% to 203.25 buoyed by gains in Econet up 13.07%,” analysts at IH Securities said on Tuesday.

Econet contributed about 15% to overall trades of US$24.7 million on the ZSE for the month of July, although this was 37.85% down compared to the previous year.

Foreign investors on the ZSE having been selling off owing to liquidity pressures in Zimbabwe that have seen a delay in foreign dividend payments and loan repayments by companies.

Econet has also been affected by this and earlier this year the company had to carry out an offshore rights initiative to raise funds to pay off a maturing finance facility.

Analysts say Econet’s mobile money platform, EcoCash, will benefit from the currency and liquidity challenges in Zimbabwe as people switch to using electronic and mobile payment services.

According to traders, foreign investors continued to show interest in Econet Wireless.

“There is still some support from the larger and international investor groups in Econet Wireless owing to strong management and prospects that telecom continues to show resilience and growth in some key areas such as mobile money and broadband. We expect Econet to remain one of the major drivers of trades on the ZSE in the next few weeks,” said one trader on the ZSE on Wednesday.

In July, Econet announced a massive data network upgrade program aimed at achieving 100% 3G coverage across Zimbabwe.

Chief executive officer, Douglas Mboweni says the program, which will upgrade all 2G base stations to 3G capability and others to 4G will be completed by December 2017.

The company has however been receiving criticism from the government for dragging its feet on infrastructure sharing and this had been viewed by some analysts as pausing some uncertainty.

However, Mboweni says infrastructure sharing is acceptable if it is on a one-on-one basis.

Source: IT Web Africa