Econet cost cutting measures lead to US$70 million savings
ECONET Wireless Zimbabwe says it has realised cost savings of up to US$70 million after asking for a 15 percent price reduction from its suppliers and a 20 percent cut on salaries.
In a press statement, Chief executive officer Doug Mboweni said the firm’s cost structure has returned to stability.
“We have cut costs by almost US$70 million to date and restored strength and stability to our cost structure. We are ready to weather any storm as a company. It’s part of our DNA.”
He said the company has also cut salaries by 20 percent across the board as a way of reducing costs and avoiding a wholesale retrenchment exercise.
He said the company has only retrenched 46 employees as opposed to media claims that the company released hundreds of workers under the ongoing wave of job dismissals.
“We as a company opted to cut all salaries by 20 percent rather than undertake wholesale retrenchments. This we did after full consultations and consent of the majority of our staff. The small number of people we released had other issues related to their contractual obligations, which I’m not at liberty to discuss,” said Mboweni.
Econet has also cut its capital expenditure program by 25 percent for the current financial year.
He said given that Zimbabwe primarily uses the US dollar and yet gets most of its consumer imports from South Africa, whose currency has tumbled more than 40 percent over the last five years to the dollar, the impact of salary cuts was not as serious as people may fear.
“We did a deep analytical study of this and concluded that a 20 percent salary cut was the best approach. In Zimbabwe we need to remember that the U.S. Dollar is a double edged sword for this country. We should really consider quoting for goods in Rands, even when paying in dollars, it could help ease our liquidity situation,” he said.
The Econet boss said whilst no one liked to cut salaries given the current economic environment it was a better option than wholesale retrenchments.
He however lashed out at the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) for destabilizing the sector.
“We all need to try and protect jobs but regulators like POTRAZ need to play their part by unnecessarily destabilizing industries that are stable,” he said.
Mboweni said Econet is a high performance environment and staff at the company know what is expected from them.
“We operate as a subsidiary of an international company, and we try to meet international standards of performance and service set by our head office in South Africa,” he said.
He praised his staff for their swift response in dealing with the current economic climate.