The Herald (Harare)

Zimbabwe: Econet Woos Small Investors

ECONET WIRELESS shareholders will tomorrow vote on the proposed split of the mobile phone operator's stock in a move designed to enable more small investors to buy shares in the telecommunications company. This will be possible after shareholders approve a "10 to one" share split at an Extraordinary General Meeting Econet believes will be a success.

Econet says while the share split will not have any impact on the company"s market capitalisation; it will simply allow investors to trade each split share at a tenth of the current market price of the company's shares.

This means that there will be more active trading in the Econet shares as more people will now be able to afford to invest in the company's shares.

At listing in 1998, small investors were the majority of shareholders in Econet.

However, as the price has risen due to the company's growth, small shareholders have gradually been squeezed out by large foreign investors and fund managers.

"Econet believes that the share split will not only allow more small investors to buy or increase the number of Econet shares they own, but will also make shareholders in a fast growing company and in which they will over time benefit from the growth in shares," says the company.

"The public shareholders of the company are numerous, with many ordinary shareholders seeking to buy shares in the company.

"This share split will open up investment in Econet to more ordinary investors who had been unable to take part due to the high prices," says Econet.

The share split comes after the Econet board realised following a study that the company's shares were now so expensive that only foreign investors were buying the company shares. As a result, the level of foreign ownership in the company has shot up from a mere 10 percent at the time Econet was listed in 1998 to more than 30 percent today.

As of yesterday, February 26, the price of one Econet share was US$6,90, which means an ordinary member of the public would have to pay US$690 to buy just the minimum lot amount of 100 ordinary shares.

But after the split, Econet 100 shares will cost less than US$68.

Econet says the share split is an important development for small investors who have always wanted to participate in the growth of the company.

Millions of small investors had bought the company's shares when it listed but such investors have not been able to buy more Econet shares particularly after dollarisation of the economy in 2009 as the shares became expensive.

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