New telecoms tariffs loom

CONSUMERS of telecommunications services must brace for a significant increase in tariffs, which will further eat into their pockets.

The director-general of the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), Gift Machengete, revealed yesterday that his board of directors will be meeting in Harare today, in a crucial meeting that might set new tariff levels for the industry.

Machengete told journalists during the presentation of the Fourth Quarter and Annual Sector Performance report that mobile network operators (MNOs) namely Econet, NetOne and Telecel have submitted applications to increase tariffs, citing the challenging economic environment that has eroded the current level of tariffs.

"Potraz is looking at the applications and very soon the regulator's position will be known. I think you are aware that Potraz has been running without a board for the past six months so now we do have a board and the board will be sitting tomorrow (today), some of these issues will then have to be brought before the board and sorted out," he said.

"So it's something we are looking into and very soon our position will be made known," added the Potraz director-general, while responding to questions from the media.

Since September last year, the country has been on a slippery slope in terms of its inflationary trajectory.

Prices of mostly basic commodities have zoomed out of control, leaving the working population on the margins of poverty.

Worsening the price spiral is a two percent tax introduced by the Finance ministry in October last year on electronic transaction.

Coupled with negative sentiment towards President Emmerson Mnangagwa's government whose heavy-handedness has undermined the hope the international community had in the administration, parallel market rates also spiked.

As a result, inflationary pressures in the country have continued to mount and the telecommunications industry has not been spared.

In the recent Monetary Policy Statement (MPS), the Reserve Bank of Zimbabwe acknowledged the pressures by knocking down the 1:1 parity that had existed between the local currency and the United States dollar (USD).

From February 20, 2019, the interbank market is now determining the exchange rate.

So far, the rate on the official market has been hovering between 2,5 and 2,7 against the USD.

Machengete said obtaining economic environment will inform the pricing of the new tariffs.

"We are not going to be picking on a particular issue to determine the price… it's a matter of a lot of other things, it's not only cost we also consider affordability, we will also consider even the exchange rate, so it's all the economic atmospherics which will have to come in," he said.

According to Fourth Quarter Performance Report, spiralling operating costs pose a threat to operator viability and puts pressure on prices.

"The economic environment impacts the sector through service demand and consumption levels, operating costs, investment et.al.

"Given the current inflationary pressures in the economy, operating cost containment will be even more crucial for operators to maintain profitability.

A review in tariffs will pile up costs for the consumer, who should brace for a steep increase in mobile broadband tariffs, voice calls and messages.

MNOs have already adjusted tariffs for roaming and international calling services at parity with the official exchange rate between the RTGS dollar and USD.