The country’s telecommunications sector held its own to post sustainable profit margins in a challenging year marred by increased working costs, low aggregate demand and foreign currency shortages; the 2020 Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) Annual Sector Report has shown.
According to the report, sector earnings for the period grew to ZWL$ 38.8 billion from ZWL$ 4.5 billion prior year, reflecting an annual variance of 751.7 percent and an inflation adjusted growth rate of 89.9 percent.
Due to the volatility of the local currency during the year, sector expenses, predominantly in the American dollar (USD) currency weighed in on profit margins.
Operating costs for the sector reached ZWL$ 20.6 billion up from ZWL$3.3 billion recorded prior year giving a variance of 528.5 percent and an inflation adjusted growth rate of 40.1 percent.
Annual Inflation reached 837 percent in July 2020 pushing price of goods and services.
“Bandwidth costs, depreciation, staff costs and network maintenance form the bulk of the operating costs of telecommunications operators,” the report states.
However, foreign currency shortages and insufficient allocation thereof from the Foreign Currency Auction Market limited operators’ capacity to embark on expansionary capital projects.
“Notwithstanding the above, foreign currency shortages continued to bedevil the economy, with implications on network expansion, upgrade and maintenance, taking a toll on quality of service as demand for data surged for operators,”
“Foreign currency constraints also affected some operations of the Authority, in particular the upgrading and maintenance of regulatory monitory equipment as well as universal service projects targeted for rural and underserved areas,” said POTRAZ.
Fortunately for the sector, the advent of the COVID-19 pandemic gave impetus for telecommunicating, remote/virtual working and e-learning which increased appetite for data and internet services.
“A total of 48,781 TB of mobile internet and data were consumed in 2020. Used international incoming bandwidth capacity also increased by 36.6 percent to record 159.665 in 2020 from 116,927 recorded in 2019,” said the report.
However, performance in other sub-markets such as voice calls and courier services faltered due to low disposable incomes and inflation which weakened demand.
Total mobile and fixed voice traffic declined by 0.9 percent to record 6,095,683,710 minutes in 2020 from 6,150,783,671 minutes recorded in 2019.
International voice traffic recorded a huge decline in 2020 of 20.6 percent to record 136.7 million minutes from 172.4 million minutes prior year.
Total postal and courier volumes declined by 57 percent to record 2.3 million items in 2020 from 5.3 million items in 2019 while international outgoing courier also declined by a record 70.5 percent.
The implementation of lock-down restrictions in various jurisdictions negatively impacted the channeling of mail and international courier in particular.
“The decline in international traffic is largely attributable to the substitution effect of alternative calling procedures presented mainly by Over-The-Top services (OTTs); this substitution was exacerbated by low disposable incomes amidst the COVID-19 pandemic,” said POTRAZ.
Capital expenditure reached ZWL$ 900.6 million in 2020 up from ZWL$ 180.3 million with the regulator anticipating an increase capital projects in the current year to meet the ever-evolving digital technologies.
“Coverage only, will no longer be a key strategic factor, hence we may see operators investing more in faster broadband technologies such as 4G and probably, 5G,” POTRAZ said.
