Telecoms sector reviews tariffs to hedge inflationary pressures

THE country's telecommunication companies have reviewed voice, data and SMS tariffs to keep up with rising production costs.

The latest adjustment, which was approved by the industry's regulator, comes after prices of various basic commodities and services such as fuel, electricity, and equipment increased significantly in the last few months.

For instance, the Zimbabwe Energy Regulatory Authority increased fuel prices on Saturday to ZWL$97,93 and ZWL$86,36 per litre of petrol and diesel from ZWL$93,15 and ZWL$83,36 respectively.

This has resulted in public transport operator Zimbabwe United Passenger Company (Zupco) also increasing its fares by 100 percent.

Econet, Zimbabwe's largest mobile network services provider, advised its subscribers that it would be reviewing its tariffs effective Monday 07, September. According to the notice, Econet adjusted voice call tariffs from ZWL$0,0722 per second to ZWL$0,1070 per second.

This translates to ZWL$6,42 per minute. The mobile service provider also hiked data tariffs to ZWL$1,2656 per MB from ZWL$0,8668 per MB, while SMS tariffs have been reviewed from ZWL$1,0980 to ZWL$1,6491 per SMS.

Sources in the telecommunications sector said other companies such as NetOne, Telecel and Africom will soon be reviewing their tariffs as well. The latest price adjustment comes after a recent Buddcomm Intelligence Report revealed that Zimbabwe's hyper-inflation was eroding revenue of telecommunication companies.

Zimbabwe is currently struggling with food and fuel shortages, an annual inflation rate of about 786 percent, and a local currency that has weakened following its re-introduction last year after a decade-long use of multiple currency regime.

"Revenue from the telecom sector came under pressure from a number of recent regulatory measures and taxes imposed by the Government, though to alleviate the effects of inflation, mobile service tariffs have been increased three times since mid-2019," read part of the report.

"While these measures were aimed at helping mobile network operator to pay for internet bandwidth and equipment with a deteriorating currency, the effect later into 2020 is likely to reduce consumption of services among subscribers. Inflation has become so high that year-on-year revenue comparisons from 2019 are difficult to assess meaningfully."

The report also noted that on the consumer side, spending on telecommunication services and devices was also under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes.

"However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures. In many markets the net effect should be a steady though reduced increased in subscriber growth," the report added.

However, despite the latest price adjustments market experts say Zimbabweans are still paying less for data, voice and SMS bundles compared to their regional peers in United States dollar terms.

For instance Econet is charging US$0,06 per minute for voice calls, which is almost the same with Zambia's Zamtel.

However, consumers in South Africa and Mozambique have to fork out US$0,08 and US$0,09 respectively to make a call, while those in Botswana and Tanzania pay more than US$0,10 per minute.

The regional average is US$0,08. While there is a perception that the country's data is expensive compared to regional countries, statistics show that Zimbabwe has the lowest tariffs in Southern Africa at US$0,01 per megabyte followed by Tanzania (US$0,02) and South Africa (US$0,025).

On the other hand, Botswana has the highest data tariffs at US$0,08 per megabyte followed by Namibia and Zambia, Kenya and Mozambique at US$0,05 and US$0,03 respectively. The regional average data tariff is US$0,04 per megabyte.

Telecommunications experts attribute Botswana's performance to the strength of the pula against the United States dollar.

On SMS tariffs, Kenya has the lowest at US$0,010 followed by Tanzania, Zambia and Zimbabwe where consumers pay an average of US$0,011, US$0,012 and US$0,015 respectively.

At the same time, consumers in South Africa, Botswana and Namibia pay US$0,020 to send SMS, while those in Mozambique and Botswana have to part ways with US$0,025 and US$0,030.