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Thursday, March 28, 2024
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Telecommunications Sector Tinkers On the Brink

A combination of an uncompetitive price tariff and mounting operational costs have hit hard on the country’s telecommunications industry players, with most of the key performance indicators in the latest industry regulator’s findings pointing in the red.

According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), 2019 first quarter (Q1) report released early this week,  sector earnings plummeted by 13 percent during the period ending April 31, closing at $ 249.9 million from $ 287 million recorded previous quarter.

Econet despite remaining the dominant player in the market, they recorded the biggest decline of 15 percent in revenues during the period.

This was however indicative of headwinds of macro-economic scale that saw inflationary pressure weigh down on consumer appetite for telecommunication services, particularly the voice services which accounts for about 60 percent of total mobile operator revenues.

Mobile voice traffic fell 4 percent from 1.462 billion minutes to 1.404 billion minutes.

“The decline in active mobile subscriptions is reflective of the general depressed demand in the economy. A number of promotions were also modified in the quarter under review; the reduction in benefits could also have led to a decline in multi-SIM usage thus negatively affecting the total active subscriber base,” POTRAZ said in the report.

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Matters are compounded by a steady decrease in active mobile subscribers that slipped from 12.9 million to 12.1 million. A 800 000 subscriber loss for the sector in just 4 months of this year would need serious soul searching on the authorities’ part, analysts have said.

Positive news emerged from the fixed telephone services were active lines grew by 3.1 percent to reach 273 330 from 268,849 recorded as at 31 December 2018.

However, fixed telephones services remain largely minor to the overall sector contribution as compared to mobile and internet services.

Emirates

Mobile internet/data usage surged 19.2 percent to 10.202 TB from 8.559 TB but doe to a spike in operational costs leading to a 6.7 increment in revenues for internet access providers of $74.4 million from $69.7 million.

“Data and internet services are taking over as the main driver for the sector growth. 4G/LTE deployment, Fibre to the Home (FTTH) deployment, ADSL and other forms of broadband access technologies will take centre stage as operators try to keep up with increased demand,” the regulator stated.

Worryingly, active internet subscriptions declined by 3.3% to reach 8.4 million from 8.7 million, which saw the Internet penetration rate dropping by 5% to reach 57.9% from 62.9% yet internet usage grew, an anomaly market watchers attribute to an uncompetitive tariff regime favoring consumers while chocking service providers.

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Earlier this year, POTRAZ said Zimbabwe remains with the second cheapest data tariff in the region at US$ 20 for 1 GB after South Africa which charges US$ 11 for 1 GB.

But following the promulgation of Statutory Instrument 142, that outlawed the multi-currency system, there are fears that with an unstable local Zimbabwean dollar eroded by the exchange rate fluctuations.

But a decline in overall capital investment remains the biggest concern for the sector.

Mobile operators recorded a 22.1 percent decline during the quarter in capital expenditure of 22.9 million from 29.5 million previous quarter.

This was however attributed to foreign currency challenges which still remain an unresolved issues going forward as far as investment into infrastructure is concerned.

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