ECONET Wireless Zimbabwe has confirmed ongoing negotiations with EcoCash Holdings Zimbabwe Limited, signalling a strategic move to diversify its revenue streams by potentially acquiring key financial technology businesses, including the widely-used mobile money platform EcoCash.
In a second cautionary note issued separately by the two companies last week, Econet said it was in negotiations to acquire assets, such as VAYA Technologies Zimbabwe (Private) Limited, Econet Insurance (Private) Limited, Econet Life (Private) Limited, MARS Zimbabwe (Private) Limited, and Maisha Health Fund (Private) Limited from EcoCash Holdings Zimbabwe.
According to the terms outlined in the negotiations, EcoCash Holdings shareholders will be compensated for the assets by Econet shares being transferred to them on a pro-rata basis.
“The envisaged Scheme of Reconstruction will not result in the delisting of EcoCash Holdings Zimbabwe Limited or Econet Wireless Zimbabwe Limited. Accordingly, shareholders are advised to continue exercising caution when dealing in the company’s securities until a full announcement is made,” read part of the cautionary statements.
Econet had previously unbundled EcoCash Holdings in 2018 when it was known as Cassava Smartech Zimbabwe, leading to the separate listing of the business unit on the Zimbabwe Stock Exchange.
Market analysts this week said the latest strategic move is expected to unlock significant benefits for both Econet and EcoCash Holdings and their respective shareholders, creating a robust and more integrated digital ecosystem in Zimbabwe.
Former Confederation of Zimbabwe Industries president Busisa Moyo said the consolidation would strengthen Econet's balance sheet and unlock shareholder value.
“Firstly, creating a consolidated balance sheet of the entities under Econet is a good thing for critical mass and possible further acquisitions and capital raising in the future, or to ward off new possible entrants, such as MTN, who may be eyeing the Zimbabwe FinTech space,” he said.
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“Secondly, the coordination of synergies in the Fintech space may be easier to harvest under one umbrella. And finally, there will undoubtedly be cost savings from having multiple corporate structures with separate overheads (consolidated) to a single streamlined structure,” added the business executive.
International transformation expert McDonald Ndovi echoed the same sentiment, saying the potential deal “presents a win-win situation for both Econet and EcoCash Holdings shareholders”.
“Econet stands to gain access to a diverse portfolio of financial technology businesses, while EcoCash Holdings shareholders could benefit from ownership in a larger, more diversified entity," he added.
Financial analyst Elfie Ncube also weighed in, saying the reconstruction between the two technology giants will enhance Econet’s market position in both the telecommunications and mobile money sectors.
“This deal will further strengthen Econet as a true, one-stop brand, and deepen its connection to millions of customers,” he said.
“Most importantly, the deal won't affect the viability of the assets involved. Instead, it will spur their growth in the near and long term and benefit consumers of the communication and financial services they are offering.
“Customer satisfaction is key to growth. Therefore, this is a very good deal for shareholders.”
