The nuts and bolts in Econet’s turnaround

Teboho Tjaoane (TT), 38, Econet’s chief finance officer, has been with the company for 14 years during which he has witnessed the company’s performance year in, year out.

He recalls moments when he thought the company was not going to survive in the next few months.  Collections were bad and relations with suppliers had soured as the company struggled to meet its obligations while customers were frustrated by the creaking network.

Things started improving three years ago when the company implemented a turnaround strategy. Today, Tjaoane is optimistic about the company’s future. The past financial year has seen the company’s operating profit increase by about 50 percent. Relations with suppliers have been repaired, allowing the company to negotiate favourable funding terms for equipment and services. Collections are on the rise and the network is performing well. This week Public Eye (PE) spoke to Tjaoane (TT) about the transformation and the future.

PE: You became the chief financial officer when the company was in financial trouble and have been part of the team that has helped transform its fortunes. Tell us about the journey so far. 

TT: The journey has been humbling. I have been working in the finance department for the past 14 years and have seen the numbers going down over the years. There was a time when I thought this was a lost cause.

It has been humbling seeing the steady trajectory that started after we implemented the turnaround strategy. There was urgent need to turn around the business before things got worse. We had to find ways to mordenise the network so that it can meet our customer needs.

PE: Part of the turnaround strategy has been and is being implemented during the Covid-19 pandemic. How has that worked out? 

TT: Most of the investment has been from cash generated from the business and I have been fortunate to have a good and strong team pulling with me. We have discontinued some long-term contracts and renegotiated new ones with favourable conditions that helped us save money and manage our cash flow.

What we have collected has been prudently managed. That is how we have managed to generate some of the cash that has helped us fund projects and put the business on the path to profitability.

This meant that when Covid-19 started we were in good standing with our strategic partners and they were able to assist us.

I must, however, mention that the basis of those relations has been mutual benefit and trust which had been built over years of working together and a shared vision.

PE: I understand that most of the projects have been funded from internal resources? How has that been possible if the company had cash flow challenges? 

TT: Funding was always an issue because we had garnered a bad reputation as a company that struggled to meet its obligations. For some time, we had to rely on cash generated internally. The key has been the prudent management of our financial resources.

The Ministry of Finance, which has helped us get some funding in the past, has been very supportive of our efforts to repay our loans. We came up with a payment plan to which we have adhered. We have kept our promises and consistently made our repayments on time.

We have worked hard to collect our debts, improve on billing and meet our obligations on time. This has improved the balance sheet, cash flows as well as relations with strategic suppliers and financiers.

PE: What would you say to the allegations of transfer pricing coming from some quarters?

TT:  Those allegations are not only untrue but also unfortunate. The shareholders’ agreement provides equal protection to both shareholders and does provide effective guidelines to the directors on how related parties’ transactions should be conducted to avoid transfer pricing.

The government, which is a shareholder in the company, has access to our finances. The board of directors has also maintained a strong oversight of our operations as a business.

Every procurement we make is meant to add value to the business and is in the best interest of the shareholders. The mission is always to give the best value to the customers who are the lifeblood of our business.

PE: How was the performance in the just-ended financial year? 

TT: I would say it has been a good year for us because our operating profit was up by 50 percent. This is the best performance in eight years and it looks like we are on a path to a solid and sustained recovery.

PE: Does that mean the shareholders can expect dividends?

TT: Dividends are coming. The mission in the past few years has been to build a strong network and restore shareholder value. That has been achieved and the business is now in a sound financial position that allows it to start generating dividends for the shareholders who have been patient with us during the trying times. We expect to start paying dividends in the next two to three years.

I must, however, say that Econet’s performance and contribution is not measured by the quest for dividends alone since we provide the infrastructure that drives the economy.

We are an employer of choice and did not cut jobs during difficult times. The company has maintained its Corporate Social Responsibility even during the most difficult of times.

PE: What does Econet’s future look like?

TT: We are optimistic that the worst is behind us and we are on a path to recovery. The numbers in the past year give us hope that we can maintain this recovery but this will take the commitment of every team member to achieve.

Our shareholders have stood with us during difficult times and we continue to appeal to them to be patient as we work to deliver sustainable growth that grows the company. We also thank the team, directors and customers.

PE: When can the shareholders expect dividends?

TT: Given the current trajectory and barring any major disasters, shareholders can expect dividends in the next two to three years. We have invested heavily in training the team and building a strong network.

The focus now is now on consolidating the balance sheet and sustaining the growth. We must thank the shareholders and customers who have been with us during the difficult times. Their support is highly appreciated.