Zimbabwe is now ranking 3rd lowest in data tariffs in Africa
By Staff reporter | 05 Sep 2019 at 17:30hrs
Zimbabwe now ranks third amongst the lowest priced data tariffs in Africa, while on revenue generation, the telecommunication sector keeps crumbling.
Costs of running and maintaining the network in Zimbabwe have soared, and the recent price adjustments have failed to save the mobile network operators to salvage any revenue, amidst high inflationary pressure.
Most mobile networks in Zimbabwe have reportedly switched off some base stations, concentrating mainly on key profitable areas as power cuts persist, making it impossible for them to continuously operate, running on alternative energy.
The recent tariff increases in Zimbabwe have only reflected in less data allocation, while the actual revenue generates way less when converted to USD value, making Zimbabwe the least profitable country to run mobile telephony and data business
Zimbabwe trails behind Malawi and Nigeria in data which is charging $0,0041 and $0.0028 for a Megabyte in USD price. All other African countries are actually charging way much more as shown in the diagram below.
While some subscribers may have complained that Zimbabwe data tariffs have soared, it is sadly untrue when we look at it from a business perspective, where initially, players were charging at actual USD prices before policy shift.
This technically means Zimbabwe mobile players have actually reduced their tariffs way too lower, and are now close to the region of non-profitability which actually threatens the sustainability of their businesses.
Our prices in the USD era were fair and many people were also earning an equivalent USD value and tthey could afford to pay for these services using the hard currency.
The same can be said for the service providers who in most cases were actually charging less during the 1:1 dispensation, and could easily convert at the face value.
While local companies are now required to charge only in RTGS value, all mobile networks are still required to pay their international obligations in hard currency, with forex support fees for critical services still being required.
The major policy shift that stopped recognizing the 1:1 effect meant that business was going to lose value and had to recuperate at the current rates, which caused a major pricing distortion in the market.
The RTGS currency has continued to drop, forcing every commodity that is imported to be restructured in actual USD pricing, seeing products like fuel having weekly pricings, but when fuel price increases, this has a line effect of increasing the means of production to the final product or service.
In critical areas where one can not afford to go offline till power resumes, diesel generators will need to run continuously, which again is a new cost that needs to be recovered. This does not put away the actual price of alternative energy like solar and all supporting infrastructure to have a full-blown solar system for any house old.
These are the real pressures that are driving costs to the communication sector. Data is imported at a certain cost to land in Zimbabwe, and if we are still to have connectivity, these costs are unfortunately inevitable.
The only way to maintain uninterrupted service provision for these business players is to continuously adjust revenue collection models and tariffs before the same operators send incapacitation signals.