Econet divorces with Ecolife as agreement expire

Econet Wireless advises that the agreement between itself and its technical partners, Trustco Mobile (Pty) Limited and First Mutual Life assurance Company (Pvt) Limited has expired. Accordingly Econet is unable to continue to offer Ecolife product.

Econet advises that it will honour claims from beneficiaries who, as at midnight 17 February 2012, were entitled to make a claim in respect of any Ecolife customers who were registered for free life cover. Other benefits, which had accrued to Ecolife customers at or before midnight 17 February 2012, will be honoured.

Imara Stockbrokers said that, in its view, the cancellation of Ecolife will not change Econet's revenue streams as Ecolife was a loyalty programme. Econet remains dominant commanding approximately 65% of the mobile network market. The demand for group products remains strong given the weak competition. The company also enjoys higher ARPUs than local peers due to the high value subscriber base, mainly corporates who are on post paid.

Management state that ARPUs and margins will be defended at $10 and 49% respectively. Ratings are undemanding at EV/Subscriber of US$ 125 against regional peer average of approximately US$ 214. The Stockbroker maintained its Buy recommendation on Econet.

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