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Mobile telcos adjust SMS, data bundle prices

by Staff reporter
06 May 2020 at 07:39hrs | Views
Zimbabwe's leading mobile network operators (MNOs), Econet and NetOne are adjusting their SMS and data bundle tariffs in what the players say is in line with the rising cost of doing business in the country.

Econet adjusted their new tariffs yesterday (Tuesday), while NetOne has announced plans to adjust tariffs with effect from today. The SMS and date bundles — including the Facebook, WhatsApp, Twitter, Daily and Weekly bundles, were adjusted by an average 35 percent, with exception of the 25GB and the 50GB Wifi bundles.

These, which were more of outliers and were adjusted by 225 percent and 150 percent respectively. An Econet official said: "The two categories were adjusted that much because when other bundles were adjusted in the recent past, the two had not been changed." Prices of goods and services have been on an upward trajectory as suppliers track the falling exchange rate on the parallel market.

This, market observers say, has forced MNOs to adjust tariffs for their data bundles which are offered on a promotional basis.

 The new tariffs are, however, still within those already approved by regulator, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz).

The continued weakening of the Zimbabwe dollar is threatening the viability of most businesses with the hardest hit being those that depend on imported inputs — among them the mobile network operators (MNOs).

The most affected are, however, those whose charges are regulated and are not immediately adjusted in line with the depreciating local currency and inflationary pressures, such as MNOs.

Since March the local currency has drastically lost its value on both the formal and parallel market.

Officially, the Zimbabwe dollar is currently pegged at 25 to the United States dollar, 38,8 percent weaker than the interbank exchange rate of 18:1 at the beginning of March 2020, and 1:2,5 as of March 2019.

The local dollar is even weaker on the parallel market where the exchange rate is currently around 50 compared to 35 in March this year. The depreciating local currency is thus putting pressure on firms that rely on imports for the production of goods as well as for the provision of services.

In the past month, the country has witnessed unprecedented price increases with market watchers blaming the weakening local currency in particular on the parallel market where it is readily available. Government has since ordered a moratorium on prices with some goods and service providers being asked to revert to prices that were prevailing on the 25th of March.

A falling exchange rate between the local currency and the US dollar means local businesses have to fork out more to get the US dollar, and if they don't compensate this with price adjustments, their cost margins will become unsustainable and so resulting in losses.

The impact of the depreciating local currency has been more telling for mobile network operators as tariffs are regulated and have not been adjusted during the period the local currency was tumbling. MNOs had their tariffs last adjusted early March and before that tariffs had been last adjusted in October 2019.

This is despite the fact that telcos import approximately 90 percent of their requirements, such as systems and software outside the country which requires foreign currency. Even locally, office and base station rentals as well as the cost maintaining vehicles and generators are now pegged in US dollars.

The telcos also have foreign debts that need to be serviced and a fast depreciating local currency risk defaults on those debt servicing and this could also taint relationships with foreign credit providers. Observers suggest the telecommunications sector should be allowed to at least charge tariffs that track the rate of inflation.

In March, the month on month inflation rate stood at 26,59 percent gaining 13,07 percentage points on the February rate of 13,52 percent. Year-on-year inflation at 676,39 percent was at a 10 year high, although the MNOs tariff adjustments have been nowhere near 600 percent.

Source - the herald

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