The performance of the telecoms sector improved significantly in the third quarter as the Covid-19 pandemic proved that the communications and information technology sector is the main enabler of various industries and sectors.
According to the latest Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) report for the third quarter, performance of the sector was strengthened by a spike in data traffic and increased use of broadband services due to the increased adoption of e-learning, telecommuting, and e-conferencing.
Mobile internet and data traffic grew by 43% to record 14 878TB in the third quarter to September 30 from 10 407TB recorded in the second quarter. Used International Internet Bandwidth Capacity also increased by 16.8% to record 149 665Mbps from 128 173Mbps recorded in the previous quarter. The growth has, however, raised concern about capacity as increased networking requirements have led to poor mobile network signal reception and slow internet speeds. This has increased the need for investment to meet the rising capacity requirements due to traffic growth is happening amid very tough economic conditions and has put immense pressure on telco margins and cashflows.
Total mobile voice traffic grew by 18.7% to record 1.56 billion minutes in the third quarter of 2020 from 1.31 billion minutes recorded in the previous quarter. Fixed voice traffic also increased by 12% to record 90.6 million minutes in the third quarter of 2020 from 80.9 million minutes recorded in the second quarter of 2020. The bulk of fixed voice traffic was generated by corporates lines. The growth in traffic is attributable to the upscaling of business operations and the increased number of workforces back at work following the relaxation of Covid-19 restrictions.
Generally, lower-income customer groups have reduced airtime and data bundles purchases in real terms. However, the increased consumption by higher-income customer groups, mainly driven by higher data consumption partially offsets this.
Revenue generated by the mobile telephone networks grew by 194.7% to record $8.9billion from $3 billion while operating grew much slower at 23.6% to record $2.5 billion from $2.1 billion recorded in the previous quarter. That is however not to say the operating environment was not challenging. The credit crunch as well as foreign currency challenges have negatively affected network expansion and maintenance as spare parts, equipment and vendor support fees require foreign currency. Potraz said that the high cost of International Internet Connectivity remains a challenge as Zimbabwe is a landlocked country, accessing bandwidth from undersea cables via Mozambique and South Africa
Internet Access Providers (IAPs) revenues grew by 148.6% to $2.85 billion from $1.15 billion while total operating costs for IAPs also rose by 109.3% to record $1.9 billion from $916.8 million recorded in the second quarter. Revenue by postal and courier operators also grew by 115.9% to $149.9 million from $69.4 million; operating costs were by 86.9% to record $109.7 million from $58.7 million recorded in the second quarter.
The industry saw growth in active internet and data subscriptions and a decline in fixed and mobile subscriptions. Active internet and data subscriptions grew by 5.6% to reach 8 726 904 from 8 267 268. As a result, the internet penetration rate increased by 3.2% to 59.9% from 56.7% recorded in the previous quarter.
Active fixed telephone lines declined by 1.6% to record 256 356 from 260 542; the fixed tele-density remained at 1.8%. The total number of active mobile subscriptions declined by 0.1% to 12,783,785 from 12,798,298; hence, the mobile penetration rate declined by 0.1% to reach 87.7% from 87.8% recorded in the previous quarter.
Key going forward according to Potraz would be subscriber retention given the fluctuations in active subscriptions. “Competition in the various service markets is expected to intensify; operators will compete on products and service offerings as well as prices,” said DG Gift Machengete. However, the current levels of market concentration are expected to remain, with Econet and Liquid maintaining dominance of the mobile and IAPs markets respectively. There will be continued momentum around innovation in non-traditional business models such as Internet of Things applications to tap into new revenue streams.
Total postal and courier volumes increased by 28.1% to record 297 680 items in the third quarter of 2020 from 232 468 items recorded in the second quarter of 2020. Despite the growth recorded in the quarter under review, postal and courier volumes are still way below the quarterly average of over 1 million preCovid-19. Postal and courier operators still face challenges in channelling items to and from several destinations because of Covid-19 policies in different countries.