Zimbabwe’s mobile network operators (MNO) have been facing a lot of criticism for the high cost of mobile data with the peak of this public outrage expressed in January when Econet Wireless, the country’s largest operator adopted a floor price strategy which raised the cost of data astronomically.
The increase was eventually reversed after a huge outcry and fingers were pointed at different players. Recently, the parliamentary committee on ICT called in the operators to a hearing on the events surrounding the increase.
In one of the presentations delivered by Econet Wireless, the MNO’s Chief Financial Officer, Roy Chimanikere briefly explained some of the dynamics in their cost model. He also highlighted how as an operator they pass on 27.5 cents off every dollar they make to the government.
This is made through fiscal contributions (these are the standard taxes that it pays as a registered company) plus additional obligations to the regulator. MNOs currently contribute 1.5% of their revenue to a Universal Services Fund. This is meant for infrastructure development in Zimbabwe’s remote areas.
Part of the fund has also been earmarked for the Innovation Fund which is anticipated to be a resource pool for Zimbabwe’s tech innovators and entrepreneurs.
MNOs also pay a 5% levy on all airtime sold. This was introduced in 2014 by the Ministry of Finance. Plans are already underway to introduce another 5% levy on airtime which will be meant for the National Health Fund.
After all these contributions the operators then have to use what’s left to settle its debts and handle operational costs.
While there is a clear case for data prices to be revised considering the tough economic conditions and an already steep pricing schedule, the point that Econet managed to deliver is that Zimbabwean telecoms have been tagged “it” as far as State cash cows go.
An increase in taxes puts a strain on any business and where viability is a concern this usually ends up being passed on to the consumer. It’s hardly surprising then that all mobile operators were keen on the idea of floor prices.
Perhaps any hope of #DataMustFall ever being a reality should start with a review of how the service providers are being put under a lot of strain before they sell the data to consumers. The lobbying efforts should also be directed at the regulator and the State.