malvernmugadzikwa
Nelson Gahadza
Zimbabwe’s telecommunications sector’s operating costs are growing faster than revenues, with the trend in rising costs attributable to inflationary pressures in the economy that has not spared the sector.
Despite the relative slowdown in inflation and exchange rate, the economic environment remains volatile and fluid. The greater part of the year was characterised by rising inflation and exchange rate disparities which resulted in rising costs.
According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) sector performance report for Q2 2022, mobile operators operating costs surpassed the growth in aggregate revenue which was at $38,9 billion, up 35,1 percent from $28,8 billion achieved in the first quarter 2022.
“Operating costs grew by 44,9 percent in the second quarter of 2022, to record $24,6 billion from $17 billion recorded in the first quarter of 2022.
“The trend of rising costs is attributable to the inflationary pressures in the economy, the sector has not been spared,” Potraz said.
Potraz said mobile network operating costs continued to increase, with staff costs, bandwidth costs and depreciation being the main cost drivers for mobile operators.
According to the report, revenue generated by the fixed telephone network grew by 38,2 percent to record $5,15 billion, from $3,72 billion recorded in the first quarter of 2022.
However, operating costs increased by 79,9 percent to record $5,7 billion from $3,17 billion recorded in the previous quarter.
Internet Access Providers (IAP) revenues grew by 45,5 percent to record $15,07 billion in the second quarter of 2022, from $10,36 billion recorded in the first quarter of 2022.
Meanwhile, operating costs for IAPs grew by 55,9 percent to record $11,93 billion
from $7,65 billion recorded in the previous quarter.
“As with the fixed and mobile sub-sectors, the growth in IAP operating costs was higher than the growth in IAP revenues. This is reflective of the prevailing inflationary operating environment,” said Potraz.
The Potraz report shows that total revenue generated by the postal and courier sector increased by 34,9 percent to $1,5 billion in the second quarter of 2022 from $1,1 billion recorded in the first quarter of 2022.
The sector’s operating costs increased by 43 percent to record $1,28 billion from $895,3 million recorded in the first quarter of 2022.
“ . . . operating costs grew by an even greater margin of 43 percent, whilst capital expenditure declined by 64,5 percent,” reads part of the report.
Meanwhile, capital expenditure by mobile operators amounted to $300,5 million in the second quarter of 2022, down from $1,7 billion recorded in the first quarter of 2022.
Potraz said the capital expenditure by mobile operators was mainly in national switching, national transmission as well as hardware and software.
During the period under review, the total number of active mobile telephone subscriptions was 14,006,034 and this translates to a 2 percent decline from the 14,289,085 recorded in the first quarter of the year.
All the mobile operators recorded a decline in active subscriptions in the quarter under review.
Econet, NetOne and Telecel subscriber bases declined by margins of 2,5 percent, 0,3 percent and 7,5 percent respectively.
“Telecel subscriptions have been consistently declining, however, the decline in Econet and NetOne active subscriptions are atypical. The phenomenon is not expected to continue.”
Growth in fixed telephone subscriptions was recorded in the quarter under review, as active subscriptions soared by 1,5 percent to reach 246,722 from 243,123 recorded in the first quarter of 2022.
The overall 1,5 percent growth in fixed telephone subscriptions led to a 0,03 percent growth in the fixed teledensity to reach 1,63 percent from 1,6 percent recorded in the first quarter of 2022.
Bongani Ndlovu