Low tariffs impact Econet’s capital expenditure programme

Low tariffs impact Econet’s capital expenditure programme

Econet Wireless Zimbabwe, the country's largest mobile network operator, says the current low tariffs are affecting its capital expenditure.

In a trading update for the quarter ended May 31, 2023, Econet said the last tariff review for the sector was carried out in April when the interbank rate was US$1: $1000, which in comparison to the interbank rate of $2 577 at the close of the quarter under review was a significant depreciation of 158%.

Local tariffs approved by the Postal and Regulatory Authority of Zimbabwe are currently pegged at $94,41 per minute for on-net calls, translating to US$0,01 using the official exchange rate of US$1:$4 777.

This means Zimbabwe has one of the lowest tariffs in the world, with several countries in the region charging an average of US$0,10 per minute.

At the same time, an 8G private WIFI data bundle now costs $111 342, translating to US$0,02 per megabyte.

Econet said it continues to witness an increase in demand for its services, with the usage of voice and data for the quarter under review growing by 30% and 31% respectively.

The listed telecommunication and technology firm however noted that this increase in volumes requires further investment into its platforms and systems that drive network capacity and capabilities.

“Our capital expenditure programme which continues to be constrained by lack of availability of foreign currency to pay our suppliers over the next 12 months is expected to be about US$135 million. This capital expenditure will require a supportive pricing regime given the inflation trends and currency depreciation,” Econet said.

Calls for a cost-reflective tariff comes at a time when Econet says it is in the process of implementing a virtualised core network that will replace its aging core network system.

It said the upgrade will enable the company to launch additional products and services and implement faster product changes to enhance the customer experience.

“We also plan to upgrade our radio network in Harare, Bulawayo and Manicaland by the end of the 2023 calendar year. For the period under review, the business upgraded 30% of our Harare and 70% of the Bulawayo base station sites. We have since seen an increase in the speed and volume of data consumed by our customers” following the upgrades.

The company has started deploying Business Support Systems (BSS) in a phased manner starting with a new digital Know Your Customer (KYC) platform. The platform leverages on digital identification, distribution and other partner management services to speed up and simplify the KYC process.

“This service enables convenient access for our customers to our digital ecosystem and our partner services as well. All digital ID subscribers will have greater ability to engage in self-service activities on our platforms,” Econet said.

Econet saw a 137% increase in revenues during the review period, compared to the same period last year, in inflation adjusted terms. — Business Writer.

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