Zimbabwe economy hit hard mobile operators

By Staff reporter | 26 Mar 2020 at 20:17hrs
ZIMBABWE'S economic crisis has hit hard mobile operators who are facing acute power cuts and critical shortages of foreign currency, the telecommunications industry regulator has said.

In a trade update yesterday, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) said the operating costs of mobile operators were on the increase, hindering networks expansion projects.

"Foreign currency challenges and the credit crunch continue to slow down network deployment, upgrades and maintenance. At the same time, incessant power cuts continue to disrupt networks availability, forcing operators to resort to alternative power sources such as diesel and solar power, thereby increasing their operating costs.

"The high cost of International Internet Connectivity remains a challenge, as Zimbabwe is a landlocked country, mainly accessing bandwidth from undersea cables via Mozambique and South Africa," Potraz director-general Gift Machengete said in the update.

In the 2019 review, Machengete said it was characterised by a trend of growing revenues and rising operating costs due to an inflationary environment.

The quarter-on-quarter growth in revenues averaged 87,2 percent against quarter-on-quarter growth in operating costs of 90,6 percent.

"The annual sector revenue for 2019 was $4,5 billion compared to US$1,6 billion in 2018. Operating costs for the sector in 2019 amounted to $3,3 billion compared to US$974,4 million recorded in 2018."

Potraz said the performance of the sector in 2020 would be dependent on the general socio-economic environment.

"Data and Internet services will continue to drive industry growth. However, demand levels for fixed broadband at household level may fall due to rising prices. The use of Over-the-Top services, such as WhatsApp, Skype and Viber, is expected to grow as consumers cut back on communication expenditure due to dwindling disposable incomes.

"In the face of depressed demand, a shift in operators' business models around Internet of Things (IOTs) is inevitable, as is the trend the world over," Machengete said.

According to Potraz, the year 2019 registered marginal declines in penetration rates across all subscription based markets.

"The fixed tele-density declined by 0.1 percent to record 1,8 percent in 2019 from 1,9 percent recorded in 2018. The mobile penetration rate declined by 2,5 percent to reach 90,6 percent in 2019 from 93,1 percent recorded in 2018 whilst the internet penetration rate declined by 2,3 percent to reach 60,6 percent in 2019 from 62,9 percent recorded in 2018.

"The decline in the penetration rates is largely attributable to the significant reduction in competitive promotional offerings by operators, forcing subscribers to cut down on use of multiple SIM cards as well as dwindling disposable incomes."

However, he said there was some positive growth in the industry in 2019.

"The total voice traffic increased by 15.2% to record 6.15 billion minutes from 5.34 billion minutes recorded in 2018. The growth in voice traffic is attributable to the growth in mobile on-net traffic because of the promotions that offered bonus minutes for calls within the same network.

"International incoming traffic declined by 4.4% to record 170.7 million from 178.4 million minutes recorded in 2018. International outgoing traffic also declined by 34.3% to record 62.4 million minutes from 95.1 million minutes recorded in 2018," Potraz said.



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