admin
Enacy Mapakame
As inflationary pressures continue to weigh on businesses due to increased operating costs, the country’s mobile network operators’ risks lagging behind in the digital wave that has been presented by the COVID 19 pandemic as mobile network operators charge unsustainable tariffs.
While the pandemic has caused severe economic damage across the globe due to disturbances to operations, the same brought opportunities for the telecommunications sector as world over the market has adopted e-commerce.
This requires use of information technologies with data and internet service providers expected to cash in on the crisis as the market rely on internet services for communication and running their businesses away from the office.
Apart from corporates, e-learning has also become integral for the education sector starting from primary up to tertiary education.
However, in Zimbabwe, upgrading existing infrastructure and networks to keep everyone connected and meet increased usage will be a huge task as tariffs continue to lag behind operating costs.
Tariffs for the telecommunications sector have not been aligned with the movement in cost of service provisions as well as foreign currency exchange rate both on the official interbank market and illegal parallel market.
According to figures from the Zimbabwe National Statistics Agency (Zimstats), annual rate of inflation reached 765 percent in April 2020 while the exchange rate hit an average $75 for US$1 from $4,75 in April 2019.
Resultantly, voice tariffs are now only 33 percent of what they were in April 2019 when they were approximately $0,22 per minute or US$0,0463 but are now at $1,17 or US$0,0156.
Data bundles are now just 28 percent of what they were in April 2019 when charges were $0,05 or US$0,0105 per megabyte but now pegged at $0,23 or US$0,003.
Regulator, Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) has acknowledged the anomaly giving a ray of hope to operators of a possible respite soon.
“Given the inflationary pressures in the economy, operating costs containment will be even more crucial for operators to maintain profitability as the growth of operating costs poses a threat to operator viability,” said Potraz in their 2020 first quarter report.
Currency depreciation due to rising inflation have seen internet service providers struggle not only for profitability but to remain in business.
This has been the case although Potraz says it is now using a new tariff model- Telecommunications Pricing Index (TPI) which takes into account the cost of proving services, market trends, economic fundamentals and affordability.
The cost of data and internet service provision in Zimbabwe is further worsened by the country’s geographic location – landlocked.
Just like any other sector in the economy, the performance of the telecoms sector will also continue to be determined by the operating environment going forward.
Service demand and consumption levels, operating costs and investments among others will have an impact on performance of the sector.
Online Reporter