‘New telecommunication fees trigger entry barriers’

PROSPECTIVE players in the country’s telecommunications sector will this year continue  to face hurdles in penetrating the market due to intensified competition and a hike in registration fees.

ACTING BUSINESS EDITOR

While cut throat competition has become a common feature among the country’s three mobile phone operators — Econet, Telecel and NetOne – further pushing down the cost of communication, analysts said an upward revision in the fees would perpetuate an oligopoly.

An oligopoly is a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. Although only a few firms dominate, it is possible that many small firms may also operate in the market.

The information communication technology sector, which is one of the fastest growing sectors in Zimbabwe, remained very competitive in 2013 at a time when key sectors such as manufacturing had raised the red flag.

“Mobile service providers were caught up in a pricing tiff in the second half of 2013. A number of promotional packages were launched and these led to an increase on the call time spent and revenue by nearly 4,3%,” MMC Capital said in its outlook for 2014.

“The licence fees for mobile operators were reviewed to $137,5 million for 20 years and this has raised the barriers of entry for the sector which is already oligopolistic in nature and capital intensive after the increase in the fees.”

The new fees, according to a visiting International Monetary Fund was a key driver of government in 2013. Econet became the first operator to meet the new fees, leaving Telecel and NetOne negotiating with the telecoms regulator for payment plans.

Official figures show that mobile penetration now stands 97% while teledensity is at 100% and broadband and data services developing and still present opportunities (35% penetration rate).

Experts say low service level and mobile financial services were yet to be exploited as the country’s financial exclusion remains high.  With no changes to the telecoms law, competition among mobile phone operators will remain a three-horse race as some players are yet to meet the new licence fees.

12 Comments

  1. Which fees ? What are they ?
    This is rubbish reporting.

    1. Too true. Hapana zve article apa, and this acting business editor should never be confirmed in that position. Tingatame!
      How is $1 per customer per year a barrier?
      What competition is there when Econet clearly dominates even the regulator?
      What teledensity when statistics show that number of lines per person averages two and half?
      Tangai madzidza mozonyora imi vaActing Business Editor. matonyara kuisa zita pane marara aya.

  2. matechnician onaiwo zvekuita naben uyo. Nxa

  3. licence to operate zve mdara, 137 million for 20 year licence

  4. dont you have programers who can block these irritating adverts like ben’s. be serious

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  6. What Ben is doing is what we call Trolling on the webscape it can get serious than this and its a bit hard but possible to block him

  7. Ughm people wen u don know what a barrier to entry is then u shuld keep quiet. The article is right. A license fee of 150 mil is obviously gon stop other people who wish to enter into the sector. Econet and telecel are capable of paying these fees coz they have been in business a long time.zvakutoreva that an ordinary zimbo businessman won’t be able to get into the sector.having jus those three providing tele services is not gud for the consumer and for competition purposes

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