Econet Zimbabwe signals ZSE exit, set to unlock new infrastructure strategy

Econet Wireless Zimbabwe has announced its intention to delist from the Zimbabwe Stock Exchange (ZSE) voluntarily. The move comes as the company seeks to unlock shareholder value and better reflect the worth of its assets, which it says have traded at a persistent discount compared with regional peers.

The telecommunications company will establish a new subsidiary called Econet Infrastructure Company Limited, or Econet InfraCo, to manage its passive infrastructure, including towers, real estate, and power facilities. After this separation, Econet InfraCo plans to be listed on the Victoria Falls Stock Exchange (VFEX), which operates in US dollars, through an introduction.

Before the delisting takes effect, the company will give shareholders a choice if they do not want to stay invested in the company. Eligible investors can choose a mix of cash and shares in the new company, Econet InfraCo. Up to 30 percent of InfraCo’s shares will be available for this option, while the remaining 70 percent will stay with Econet.

Econet to unlock value through infrastructure focus

The company states that this decision is intended to provide better visibility into its infrastructure assets and to align with global best practices for mobile network operators. By establishing a dedicated subsidiary for its passive infrastructure, the telecom company aims to improve capital allocation and enhance operational focus.

Telecom companies in the region that have sold their towers and infrastructure have seen their values increase. They often trade at six to eight times their earnings before interest, taxes, depreciation, and amortisation (EBITDA). Econet thinks that doing the same and listing on a US dollar-based exchange will better show the value of its infrastructure assets.

Read also: Cell C to list on Johannesburg Stock Exchange, targets growth enhancement

Econet InfraCo’s listing on the VFEX is important for its strategy. Analysts believe that markets in US dollars can help show clearer prices for real estate and infrastructure assets. This makes it easier for investors to understand the true value of these assets, which can be hidden in traditional mobile network valuations.

The company plans to delist from the ZSE and spin off InfraCo, which brings up some practical issues. First, shareholders must approve the ZSE delisting. The company has hired an independent expert to assess the value of InfraCo shares fairly. The timing of this transition will depend on the following regulations and getting acceptance of the exit offer from investors.