Zimbabwe's mobile network operators hit by currency woes

Zimbabwe's mobile network operators (MNOs) are reeling from a sharp decline in profitability, with spiralling costs and exchange rate volatility emerging as key culprits, according to a new industry report released by the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz).

The first quarter 2025 report revealed that MNOs' cost-to-income ratio worsened by 16.85 percentage points, hitting 59.84% — meaning operators spent nearly 60 cents to generate every ZiG dollar in revenue. This signals a significant drop in profit margins.

"This marks a concerning trend," Potraz said, "and reflects the cost pressures increasingly undermining business performance across key sectors of the economy."

Zimbabwe's tourism and mining sectors also reported slowdowns in the same period, with the Zimbabwe Tourism Authority recording a 16% drop in domestic tourist arrivals, while the Chamber of Mines reported a slump in mineral revenues — excluding gold — amid rising operational costs and subdued global commodity prices.

Potraz's findings mirror concerns from across industry, where business leaders have cited a hostile tax regime, high tariffs, and unstable exchange rates as major drags on revenue and capital investment.

Mobile telecoms revenue fell 4.2% in Q1, declining from ZiG6.42 billion in the fourth quarter of 2024 to ZiG6.15 billion in early 2025.

Potraz attributed stronger performance in Q4 to seasonal consumer behaviour linked to festive spending. By contrast, the start of 2025 was characterised by financial strain from back-to-school expenses, which diverted disposable income from telecoms.

Meanwhile, operating costs surged by 33.46%, climbing from ZiG2.8 billion in Q4 2024 to ZiG3.68 billion in Q1 2025. In response, capital expenditure halved, from ZiG842.2 million to ZiG423.81 million, as operators tightened spending amid the financial squeeze.

Despite the headwinds, internet and data services continued to dominate the revenue mix for telecoms providers.

"Data services contributed 50.28% of total mobile revenue in Q1, up from 48.91% in the previous quarter," Potraz noted.

This shift is being driven by a surge in demand for video streaming and data-intensive applications. Mobile internet traffic increased by 17.31%, from 97.19 petabytes in Q4 2024 to 114.02 petabytes in Q1 2025.

In comparison, mobile voice traffic rose more modestly by 5.38% to 4.2 billion minutes over the same period.

The number of active internet/data subscriptions grew slightly by 0.45% to 11.94 million. However, due to a 1.6% increase in the estimated population, the internet penetration rate dropped by 1.37 percentage points, falling to 76.19%. Similarly, the broadband penetration rate fell from 75.52% to 74.37%.

"While subscription numbers rose, population growth outpaced it — and since penetration is a ratio, the result was a net decline," Potraz explained.

Despite the challenges, Potraz said the sector remains poised for recovery and growth. The authority pointed to positive developments including the rollout of 5G base stations, entry of low earth orbit satellite internet providers, and adoption of emerging technologies like artificial intelligence and machine learning.

The sector also recorded a 53.33% increase in 5G deployments during Q1 as operators race to enhance network quality and reach.

"With the ZiG exchange rate showing signs of stabilising, a more favourable operating environment is anticipated," Potraz said. "This will help instil confidence in continued investment and sector development throughout 2025."

As Zimbabwe's digital economy continues to evolve, stakeholders are hopeful that improved infrastructure, innovation, and regulatory stability will help mobile operators navigate the current financial storm.