Econet's ZSE Delisting: Implications for Shareholder Value and Zimbabwe's Capital Market Outlook

Econet Wireless Zimbabwe's decision to pursue a voluntary delisting from the Zimbabwe Stock Exchange (ZSE) marks a pivotal moment in the country's capital market history. Citing a "gross undervaluation" of its shares relative to its intrinsic asset value, the telecom giant has initiated a strategic review that could culminate in a merger with its parent company, Econet Global Limited, or a listing on the US dollar-denominated Victoria Falls Stock Exchange (VFEX) according to reports. This move, if finalized, would not only reshape Econet's capital structure but also exacerbate the ZSE's structural challenges, potentially triggering a broader exodus of blue-chip firms and deepening liquidity crises.

Strategic Rationale for Delisting

Econet's delisting is rooted in the ZSE's systemic inability to reflect the company's true value. According to a Bloomberg report, Econet's shares trade at a significant discount compared to its African peers, which command valuations of 6–8x EV/EBITDA. This undervaluation, exacerbated by chronic currency volatility and liquidity shortages, has constrained Econet's access to competitively priced capital for infrastructure upgrades and 5G expansion. The ZSE's detachment from the real economy-where most transactions now occur in US dollars-has further eroded investor confidence, creating a misalignment between market capitalization and operational performance.

The company's proposed restructuring includes spinning off its passive infrastructure assets (towers, real estate, and power) into a new entity, Econet InfraCo, which will be listed on VFEX. Econet will retain a 70% stake in InfraCo and use up to 30% of its shares to settle shareholder exit offers. This separation of volatile telecom operations from stable infrastructure cash flows is designed to unlock value for stakeholders while aligning with the USD-based realities of Zimbabwe's economy.

Shareholder Value and Capital Efficiency

For shareholders, the delisting introduces liquidity risks and valuation uncertainty. The ZSE's current structure, where Econet and Delta Corporation account for over 70% of total market capitalization, means the removal of Econet would reduce daily trading volumes by 40–60% and trigger a 30–45% drop in the All-Share Index within weeks. Minority shareholders face challenges in valuing their stakes, as buyout premiums and exit mechanisms remain opaque.

However, the proposed VFEX listing offers a potential solution. By listing InfraCo on a USD-denominated exchange, Econet aims to attract foreign institutional investors and align its valuation with global benchmarks. This mirrors broader trends in emerging markets, where companies like those in Brazil and Turkey have navigated debt distress and currency volatility through strategic restructurings. For Econet, the move could enhance capital efficiency by accessing deeper liquidity pools and reducing reliance on the ZSE's constrained ecosystem.

Broader Implications for Zimbabwe's Capital Market

Econet's departure would accelerate the ZSE's decline, compounding its struggles with near-zero trading volumes post-dollarization and the exodus of other blue-chip firms. A 2025 analysis by EquityAxis notes that Econet's delisting could trigger a "domino effect," as remaining heavyweights reconsider their listing strategies. This aligns with global trends: in Europe, for instance, 15% of listed companies delisted between 2010 and 2022, with Euronext alone losing €467 billion in market capitalization in 2023 according to a 2023 analysis. Such trends highlight the fragility of capital markets in environments marked by policy instability and macroeconomic volatility.

For Zimbabwe, the ZSE's erosion underscores a systemic failure to support capital-raising for critical sectors. As Econet's case demonstrates, local exchanges are increasingly disconnected from the real economy, where USD transactions dominate. This misalignment not only deters institutional investors but also stifles innovation and infrastructure investment, further entrenching the country's capital efficiency challenges.

Conclusion

Econet's delisting represents a strategic pivot to address undervaluation and improve capital efficiency, but its broader implications for Zimbabwe's capital market are profound. While the VFEX listing and InfraCo spin-off offer a path to value creation, they also highlight the ZSE's inability to adapt to the realities of a USD-driven economy. For investors, the key takeaway is the growing importance of alternative listing venues and cross-border restructuring in emerging markets. As Econet's case illustrates, corporate value and capital efficiency in such environments increasingly depend on navigating structural market failures through innovative, if disruptive, strategies.