Zimbabwe’s leading mobile operator Econet is taking over local bank shares on the stock exchange, positioning mobile money as a growing threat to conventional banks in the country.
Econet is set to annex TN Bank’s shares on the Zimbabwe stock exchange through a share trading deal regarding mobile money services as an added availability at the local bank.
Currently holding 45 percent of TN Bank’s shares on the national stock exchange, Econet will acquire the remaining shares once the deal between the two entities is finalised.
The agreement encompasses the trading of company shares at a rate of one Econet share for every 28,79 TN Bank shares.
“EWZ will pay for the TN shares using Econet Wireless Zimbabwe shares in its treasury stock and there will be no issue of new shares. The transaction will have no material effect on the earnings per share and net assets of Econet Wireless Zimbabwe,” the company told The Zimbabwean on Tuesday.
TN Bank shareholders will have the option of receiving US$15.91 for every TN Bank share, although the price has halved since June 2012, when it was worth US$32.08 per share.
A total of 30.46 percent of shareholders have agreed to accept the offer.
Econet has succeeded to integrate its mobile money transfer service, called EcoCash, as an added alternative to local bank interaction that offers only hard cash redemption.
Subsequently, banks have been adopting the EcoCash system as part of banking services. Even CBZ holdings, the leading Zimbabwean financial institution, is now a customer.
However, bank customers of mobile money subscribing banks still transact via the conventional banks, with Ecocash as a value- added service.
Statistics reveal that CBZ holdings contributed up to 50 percent of Econet’s current mobile money customer base, which has a count of 1.8 million subscribers.
Banks are now a prime target market for mobile money services to boost subscriber numbers.