Wednesday , June 16 2021

Econet sales flows telecommunications of Zimbabwe, Here's why



So, the main news is that Econet (Econet Wireless Zimbabwe Limited) will be divided into two companies: Econet Wireless Zimbabwe Limited and Cassava Smartech Zimbabwe Limited. Technically speaking, although CSZL already exists, they are just waiting to collect part of Econet.

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Hidden among the mumbo jumbo is an interesting fact. Econet is selling a 51% stake in Likuid Telecom Zimbabwe (LTZ) for a value of $ 135 million. At present, Econet has about 32,000 shares in LTZ, while the other (49%) are owned by Likuid Telecoms Holdings (LTH) of the international company listed on Dublin Exchange.

Econet will sell its current 51% LTH and instead of money, they will receive LTH shares worth $ 135 million instead. The result is that Econet will no longer have a LTZ that will now be firmly controlled by LTH. In return, Econet will get about 10% LTH.

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Why Econet does it

The truth is that most companies had a hard time due to the economics of rolling coal. The most important issue is to raise the exchange rate that is often needed for the purchase of basic equipment outside of Zimbabwe. LTZ requires a lot of capital so that it can buy items such as routers, Internet bandwidth, base stations, and the like, all coming from Zimbabwe.

Becoming part of the LTH family, LTZ will now be a solid part of the liquid family. LTH is listed on the Dublin Stock Exchange, which means it has direct access to the international capital market. This means LTZ will now have a direct benefit because it will have direct access to capital through LTH.

LTZ sales will not affect the value of Econet Zimbabwe. They simply replace one invisible tool for another. In return, Econet Zimbabwe shareholders will get the ownership of foreign capital that has the potential to get them forek if and when they sell it. Who would take the opportunity to buy a cheap forek in pain now in one is one!

At the heart of business is the risk issue. There is always a risk that you will not say a profit as a business. This risk is significantly reduced if you invest in different assets. We call this diversification business. Econet is much more risky to invest in LTZ only after doing business in a single market that is at the top.

Replacement of LTZ shares for LTH shares will automatically lead to the diversification of shareholders of Econet Zimbabwe. This will mean becoming a part of a business that has branches in several countries across Africa. The risk of decay is considerably thinner than those with LTZ.

Nothing will change in the way Likuid Operates

Although technical Econet abandons the control of Likwik Zimbabwe, nothing will change in the way this business operates. The change is for all intentions and purposes of interest for people in the financial world. There is an incentive for Econet and Likuid to group together and they will remain bound to the disc only now, because they will be needed not because they are under the same direct control.

If you are looking for a comparison of how this will work, think of Telone and EASSi. The former owns shares in a later cable company. Normal people do not care about this. The difference is that Econet and Likuid are much larger.


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