THE Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) says foreign currency challenges are choking operations of telecoms companies resulting in many failing to expand and upgrade their systems.
The industry regulator said this had seen players failing to provide services in some remote areas of the country, cutting off some sections of the population from the global world.
In a sector performance report for 2023, Potraz director-general Gift Machengete said that bandwidth costs as well as ever rising operational costs further constrained the capacity of the telecoms companies.
Machengete said the sector, which was highly capital intensive, was in need of foreign currency to invest in network expansion and upgrades.
“While the sector is highly capital intensive it still faces inadequate foreign currency needed to invest in network expansion and upgrades,” Machengete said.
“Low disposable incomes in the country remain a major constraint on service affordability and uptake by postal and telecommunications users.”
He added: “The sector is also experiencing operational challenges owing to power outages which increase costs of service provision.
“These are operational realities that work against the viability and growth of the sector.”
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In October, telecom players were allowed to increase tariffs several times to meet the challenges of the local operating environment.
The tariff adjustments, dating back to February and April 2023, triggering a public outcry.
Potraz justified the increases saying telecommunications companies have been operating below profitable thresholds, despite the apparent dollarisation of mobile money transactions.
Telecoms operators welcomed the increase saying it will help to meet the operating costs linked to the country’s galloping inflation.
They argued that their operations were largely dependent on imported equipment and accessories hence the need for foreign currency.
Before the tariff increase, the telecoms players were already pricing their services in forex.
Machengete said the telecoms operators did not earn any profits because of the ever increasing operational costs and the harsh economic climate.
“The telecommunication industry experienced a growth in nominal revenues in third quarter of 2023 influenced by inflationary pressure and a depreciating currency,” he said
“However, operators’ revenue in real terms did not improve in the same margins in the quarter under review.”
Zimbabwe’s telecommunications providers have in recent months been hiking data charges regularly citing surging operational costs and the need for increased foreign currency to import spare parts.
Price increases are authorised as part of the regulator’s efforts to limit the impact of the local operating context on telecoms operators’ activities.
These include hyperinflation, a weak local currency, a shortage of foreign currency, rising operating costs, increased vandalism of infrastructure and power cuts, among others.
In addition, Potraz recently submitted to the government a new pricing model based not only on the local currency but also on the US dollar.
Potraz said the measure would guarantee price stability on the local telecoms market.
