The country’s biggest mobile network operator (MNO) Econet Wireless has called for a tariff increase. The company cited that this will be the only way to keep the telecoms industry viable as the sector is very resource-intensive and relies heavily on foreign currency which is in short supply.
“Our headline tariffs were last reviewed in August 2020. Given the inflationary pressures experienced, we believe that another tariff review is due in order for the sector to remain viable. All our pricing is determined by the regulator using given cost inputs. The timely adjustment of tariffs, using the Telecommunications Pricing Index, is critical to our continued viability as a business.”
James Myers , Econet Chairman via New Zimbabwe
If you remember, around this time last year, Econet, NetOne and Telecel were given the green light by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) to steadily increase prices.
At the time of this announcement, we speculated that there was a hard cap that was put tariff increases on all the MNOs. And it looks like, with the most recent 20% Econet price adjustment, that ceiling has been reached. In the meantime, the inflationary environment hasn’t helped and one area that Econet has bemoaned about for the longest time is its reliance on the inconsistent nation power supply.
“We make use of diesel-powered generators to supplement what we draw from the national grid. As a result, we continue to see an increase in our carbon footprint as well as the cost of doing business. We continue working to enhance our green footprint and reduce carbon emissions by increasing the number of solar-powered base station sites.”
James Myers , Econet Wireless Zimbabwe Chairman
James Myers also noted that revenue has increased due to the demand for data as well as:
- Improving operational efficiencies and continued cost containment measures yielded positive results which saw the earnings before interest, taxation, depreciation and amortization (EBITDA) margin increase to 52%.
- Net exchange losses decreased by 46% to close the year at ZW$ 13.7 billion
- Capital expenditure investment remains subdued due to the scarcity of foreign currency.
- Econet’s earnings per share increased from a loss of 237 cents per share to positive earnings per share of 35 cents. Cash flow remains positive and we continue to manage cash position prudently in light of the challenging operating environment.
- The balance sheet is bolstered by Econet’s investment of about 7% of Liquid Telecommunications Jersey (LTJ), which is now valued at US$ 145 million.
With all of that out of the way
We need to spare a thought for the customer. Econet might need to increase its tariffs but the price of data, at a time where internet services are vital, continues to leave many behind. This is one of the many reasons why we say WhatsApp is the internet in Zimbabwe because that’s all many can afford.
Now, it’s easy to levy blame at Econet but I think this is something that the Ministry of ICTs and Ministry of Finance could possibly address. By this, I mean finding a way to lessen the burden on MNOs in taxes and other obligations so that the benefits can trickle down to the customer.
Internet services should be classified as an essential service and ways to make accessing the World Wide Web more affordable should be prioritised.
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