ECONET Wireless Zimbabwe, the country’s largest telecommunications firm, has announced plans to pay a $10 million quarterly dividend, its first ever, as inflation fears drive cash-rich businesses to off-load.
Zimbabwe is going through a financial crisis, fuelled by billions of dollars in unbacked electronic balances, which analysts say is a virtual currency whose value is fast eroding. The balances have ballooned on the back of unrestrained government borrowing, mainly through the issuance of Treasury Bills to bridge a gaping budget deficit, which stood at $1,4 billion in 2016 and is expected to widen further this year.
On Tuesday, Econet said it had declared a dividend of 0.386 cents per share amounting to US$10 million for the first quarter ended 31 May 2017. The company, which has a good dividend record, typically pays out a yearly dividend, which amounted to $12,1 million in its last financial year, which ended in February 2017.
Econet, whose share price has risen by over 120 percent in the year to date on the Zimbabwe Stock Exchange (ZSE), is one of the bourse’s major drivers. Earlier this year, Seed Co, which reported a 40 percent rise in both turnover ($135 million) and earnings per share (8,77 cents) as well as a 183 percent jump in cash holdings, offered shareholders a special once-off dividend of 1,46 cents per share, in addition to the declared 2,92 cents per share. Seed Co paid out $4,5 million under the special dividend scheme.
Econet, whose half-year ended on August 30, is yet to report for the current trading year, but this dividend announcement could serve as a signal of good performance for the company during the first half of the year. The company’s shareholders renewed Econet’s share buy-back authority, with an increased maximum of 20 percent of the total issued shares, which the firm has previously maintained at 10 percent. The local bourse surge has been as a result of investors turning to stocks to escape the unsatisfactory returns and risk in other asset classes, a situation which has been worsened by the economy’s current currency quagmire.