THE value of Econet Wireless Zimbabwe shares nearly doubled in four days of trading on the Zimbabwe Stock Exchange as investors appear to warm up to a cautionary statement released last Tuesday, announcing a planned merger of EcoCash Holdings Zimbabwe’s non-banking units with the mobile network operator.
After the announcement on Tuesday, the Econet stock price witnessed a 65.7% jump from 122980 cents to conclude the week at 203900 cents (ZWL2,039) at the close of trading yesterday (Monday).
At the same time, EcoCash Holdings Zimbabwe’s stock experienced a notable increase in share price of 23.6%, rising from 20568 cents to 25425 cents at the close of trading yesterday.
Figures from the ZSE show that Econet stock initially rose 14% last Wednesday, reaching 136931 cents before rising further to 154766 cents on Thursday. The positive momentum continued as the company’s stock price witnessed an additional 12.53% increase, ultimately closing the week at an impressive 177347 cents before it rose to 203900 cents in early week trading yesterday.
Market analysts said while there were widespread gains across a number of counters on the bourse last week, the sharp rise in Econet’s share price was indicative of the market’s confidence in the impending merger. They said the trend pointed to potential sustained growth in the post-merger landscape, as investors exhibit a robust belief in the combined entity’s prospects.
“As the entities merge, a robust and resilient balance sheet is poised to emerge, comprised of well-diversified entities with the capacity to underwrite more business, ultimately creating substantial value and benefits for shareholders,” said George Nhepera, a Bulawayo-based financial market analyst.
“In the broader context, it is essential to note that the combined market capitalization of the two entities on the Zimbabwe Stock Exchange is likely to position the new entity as one of the largest conglomerates in the country. This development bodes well for the capital markets, instilling confidence among both local and international investors,” he added.
Jonathan Makombe, a South Africa-based equity analyst said the proposed Econet/EcoCash Holdings merger was a smart move that could redefine the landscape of both the telecommunications and digital finance sectors.
“The market’s positive response is a clear indication of investor confidence in the potential growth and innovation that may result from this union,” he said.
The decision by the two technology powerhouses to merge comes at a strategic juncture, as the global business landscape is rapidly evolving. By combining forces, Econet and EcoCash Holdings aim to position themselves at the forefront of innovation, creating a formidable entity capable of navigating the dynamic challenges of the modern business environment.
“The market’s enthusiastic reception is well-founded. This merger has the potential to benefit shareholders and provide a more integrated and seamless experience for consumers,” remarked David Ngoma, an analyst at a leading investment firm.
Investors and industry experts alike are closely watching the development, anticipating the creation of a formidable entity capable of navigating the dynamic challenges of the local business environment.
“Business models must respond to the times, and this is what Econet is doing,” said economic analyst Tinashe Murapata.
“Perhaps (this is) what we all need to be doing in light of tax, currency, macroeconomic conditions, and regulatory challenges that inspire consolidation rather than specialisation,” he added.
Jane Sibanda, a financial strategist, highlighted that the merger presents a unique opportunity for Econet and EcoCash to leverage their strengths, creating a more resilient and competitive player in the market.
“This move aligns with the broader trend of consolidation we have observed across industries,” she said.