More Africa NewsZimbabwe: the economic situation weighs on telecommunications operators

June 29, 2022by myles0

In its latest annual report on the Zimbabwean telecoms market, BuddeComm said that the weak economy affected the performance of the sector in 2021. In 2022, the trend continues.

The current economic crisis in Zimbabwe is weighing on the activities of telecommunications operators, among others. In a statement, TelOne, the public fixed-line operator, said it is struggling to keep its head above water in this particular context. Like its competitors, the company has to deal with galloping inflation and the weakness of the local currency. 

According to local media, annual inflation was 191% in June, while the Zimbabwean dollar has fallen 70% against the US dollar since the start of the year. Added to this is the impossibility for operators to modify their tariffs due to regulatory constraints. This explains the fact that the company has difficulty paying its suppliers and investing in the extension or improvement of its network. 

The Post and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) explained that the economic environment has an impact on the sector through service demand and consumption levels, operating costs, investments. 

The regulator’s figures show that mobile network service providers saw their operating costs rise by 10.9% in the fourth quarter of 2021, from ZWL12.5 billion (US$39 million) in the third quarter to ZWL 13.9 billion. Revenue, meanwhile, rose 34% to ZWL26.2 billion from ZWL19.5 billion in the third quarter. With regard to the fixed telephone network, operating costs increased by 40% to reach ZWL 2.9 billion compared to ZWL 2.08 billion in the previous quarter. Revenue, meanwhile, rose 35% to ZWL 3.1 billion, from ZWL 2.3 billion in the third quarter of 2021. 

It should be recalled that no tariff adjustment was approved for TelOne in 2022. Its last tariff revision took place in September 2021. If the operator cannot recover its investments by increasing its prices, the regulator recommends controlling the operating costs as a central element in the fight to maintain profitability.

Source: Agence Ecofin

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