Telecoms report shows Econet driving subscriber sector growth amid rising industry costs

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The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz)’s sector performance report for Q1 2022 shows Econet Wireless driving subscriber industry growth, but also reveals that rising quarter-on-quarter operating costs remain a threat to the sector’s viability.

According to the report released yesterday, Econet gained over 100 000 subscribers, and also increased its mobile data and voice market share in the period under review.

The listed company increased its active subscribers by 1.1% to 9 359 485 in the first quarter of 2022, up from 9 253 453 in the last quarter of 2021, while state-owned NetOne and Telecel lost 1.1% and 5% subscriber market share in the same period, to close the quarter at 4 422 595 and 507 005 subscribers respectively.

“The total number of active mobile subscriptions was 14,289,085 as of 31 March 2022. This represents a 0.2% growth from 14,257,590 recorded as of 31 December 2021,” the report said.

The industry subscriber growth however comes at a time the report shows the telecommunication industry’s operating costs grew by 22.7%, to ZW$17 billion, in the first quarter, up from ZW$13.1 billion recorded in the fourth quarter of 2021. Total mobile network revenue however increased by a modest 10% to ZW$28.8 billion, up from ZW$26.2 billion recorded in the fourth quarter of 2021.

The report noted that operating costs have been consistently rising because of the inflationary operating environment. The operating costs more than doubled from ZW$7.7 billion in the first quarter of 2021 to ZW$17 billion in the first quarter this year.

“Bandwidth costs, staff costs and depreciation continued to be the main cost drivers for mobile operators,” added Potraz.

Meanwhile, the industry report also showed that both Econet and NetOne gained 1% voice traffic market share each, with Econet ending the quarter on 74% (1.3 billion minutes of usage) and NetOne exiting the quarter on 25.1% (444 million minutes of usage). Telecel lost its voice market share by 0.2%.

“A total of 1.77 billion minutes of voice traffic were recorded in the first quarter of 2022. This represents a 2.3% decline, from 1.81 billion minutes recorded in the previous quarter. This is a consecutive quarter to record a decline in total mobile voice traffic. However, the margin of decline (-2.3%) is much lower than that recorded in the previous quarter (-14.3%),” read part of the report.

In the quarter, the report says Econet grew its share of the mobile data market by nearly 3%, while its competitors lost ground.

“Econet gained market share by 2.9% as they recorded the smallest decline in mobile Internet and data traffic. On the other hand, NetOne and Telecel lost market share by 2.3% and 0.6% respectively.”

The regulator said a total of 22,052 Terabytes of mobile Internet and data were consumed in the first quarter of 2022, representing a 14.9 % decline in traffic from 25,902 Terabytes recorded in the fourth quarter of 2021.

“The decline in Internet and data traffic was experienced across all the three mobile networks,” said Potraz, attributing the decline to low disposable incomes.

The report said in the period under review, Econet enjoyed a 100% market share of 5G technology after installing 10 base stations of the super-fast technology. The mobile network operator, which enjoys over 60% market share of base stations, was the first company in Zimbabwe to roll out 5G.

The report noted that capital expenditure by the mobile network operators, which remains much lower than international benchmarks due to the shortage of foreign currency, increased by 39.3% to ZW$1.72 billion in the first quarter of 2022, from ZW$1.24 billion recorded in the previous quarter. It said the capital expenditure by mobile operators was mainly in national switching, national transmission as well as hardware and software.