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POTRAZ Approves SMS, Data Bundle Price Adjustments

The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) has approved an adjustment in data and SMS tariffs for mobile network operators in a long expected move analysts and market players believe will help forestall dim prospects in the telecoms sector.

According to sources familiar with developments, the telecoms regulator approved a 25% tariff adjustment for SMS and between and an average 25% adjustment for data, which market watchers say will cushion industry players from a plethora of challenges, including a weakening local currency against the US dollar and unprecedented power cuts that have almost brought the industry to its knees.

Econet has since advised its customers of the tariff adjustment, which is set to come into effect today (February 4, 2020).

The continued weakening of the Zimbabwean dollar against erratic tariff reviews has become a serious threat to the viability of mobile network operators and the latest tariff adjustment will help improve the outlook and viability of operators.

The dollar which was trading at 15.7 to the US$ when tariffs were last reviewed in October last year, is now trading at around 17.5.

This means at current tariffs, players will have to generate more revenue to meet up their US dollar denominated costs.

To keep up with new technologies, telcos need to invest in CAPEX (capital expenditure). Failure to adequately do so has already seen a reversal in the viability of telecoms companies as revenues fall due to suboptimal tariffs.

The latest SMS and data tariff adjustment comes at a time operators had bemoaned the  previous tariffs which they said were sub-economic.

Since October last year, when operators got a 95% increase, the costs of doing business have gone up without a corresponding tariff review, untill now.

“Our tariff continues to lag behind inflation and given the rapid local currency depreciation since February 2019, the tariffs are now at sub-economic levels,” read the latest quarterly performance update by Econet Wireless Zimbabwe.

Competitor Telecel, last month also voiced its concern, pleading with authorities to adjust tariffs in line with inflation.

In December 2019, NetOne chief executive Lazarus Muchenje was quoted saying “costs are rising at a higher rate than our revenue generation capacity”.

“The recent power outages have resulted in hundreds of our base stations being powered by generators, which has increased our fuel consumption,” he said.

The operational costs are exacerbated by erratic power supplies forcing companies to turn to the expensive and not readily available diesel to power base stations.

Erratic grid power supply and escalating fuel costs significantly impacted on base stations running costs.

Since the last tariff adjustment, the price of diesel has gone up several times from Z$17,49 in October 2019, to Z$19,55.

 

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