daniel chigunwe
Michael Tome
Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), says the inflationary environment and reduced consumer spending negatively impacted the telecoms sector performance in the first quarter of 2023.
According to Potraz’s abridged postal and telecommunications sector performance report the challenges faced in the said quarter were exacerbated by prolonged load-shedding.
This adversely affected the overall quality of service, as telecoms players struggled to cope with the raising cost-of-service provision.
The power situation has, however, been registering a notable improvement in the second quarter owing to improved hydro electricity generation from Kariba and the coming online of the two generators at Hwange.
Furthermore, the service providers faced a mammoth task in accessing foreign currency mainly for network expansion and maintenance works.
Potraz has since implored the government to consider prioritising foreign currency allocations to mobile network operators so that they meet their obligations which require foreign currency on time.
According to the regulator, the economic environment that prevailed during the period acted against players’ further calling for intervention at both operator and fiscal levels.
The relentless increase in prices due to inflation saw market players lose revenue in real terms as working capital continued to grow at a rate that exceeded income growth, also leading to reduced network investment.
In the period consumption of the sector’s product offerings slumped as customers’ ability to afford data services diminished following waning disposable incomes.
According to Potraz, fiscal interventions to curb the dwindling trend of disposable incomes should be prioritised to enhance service affordability and boost demand in the sector.
“The economic environment directly affects the performance of the postal and telecommunication sector. The inflationary environment, unavailability of credit, reduced consumer spending, amongst other challenges continued to beset the sector,” said POTRAZ in the first quarter performance.
In the report Potraz said the sector should be prioritised in terms of government expenditure, resource mobilisation, and foreign currency allocation amongst other issues, to fully realise its role as a key economic enabler.
“Inadequate foreign currency has affected network expansion and maintenance efforts. Unlike other services that may have alternative local supply, the provision of telecommunication relies heavily on imports mainly equipment, software as well as bandwidth,” added the regulator in the report.
Consistent with the regulator mobile voice traffic declined to 2,5 billion minutes in the first quarter of 2023, a 16,7 percent dip from three billion minutes recorded in the fourth quarter of 2022.
It attributed the decline to a 50 percent tariff increase and substitution of traditional voice calls by Voice over Internet Protocol (VoIP) during the quarter.
VoIP is a technology that allows you to make voice calls using a broadband Internet connection instead of a regular (or analog) phone line.
According to POTRAZ, the slump was also a result of incessant load shedding which led to lower call-success ratios.
However, the information and communication technology (ICT) sector is expected to continue growing as it has already proven a key enabler of economic activity.
Potraz is on record saying it will continue to create a balancing act between tariff hikes and affordability, to enable the sustainability of operations in the sector.
Unexpected rise in cost of operations has continuously prompted the regulator to allow for data price increases for fixed and mobile network operators but the development has attracted complaints from the subscribers as disposable incomes remain low.
A player and consultant in the ICT sector Jameson Shonga, said harsh economic climate, characterised by mounting inflation and exchange rate instability was resulting in business uncertainty, adding it called for policy interventions at government level to restore business confidence.
“There remains a need for concerted efforts in the consolidation of strategies that deliberately focus on ICT development and effective processes that embolden investments in ICTs, digital skills and embracing emerging technologies that are crucial to the digital economy,” he said.
Bongani Ndlovu