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Econet, NetOne, Telecel operating costs growing faster than revenues

The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) released the sector performance report for the third quarter of 2021. One of the areas of concern is that of money, money, money.

Mobile operator revenues up

In the 3 months from July through September, the combined revenue for the three mobile operators grew by 15.8%. Rising from ZWL$16.9 billion in the preceding quarter to ZWL$19.5 billion.

The three main revenue drivers for mobile operators are voice, data and sms. Those three are responsible for close to 90% of all revenues. In Q3 2021, both voice (19.3%) and data (10.4%) traffic increased, leading to increased revenue. 

This was to be expected as some businesses in the economy have normalised working from home. This paired with periodical limitations to in-person socialising has meant a constant increase in demand for voice and data services.

Data revenue growing faster

Just a year ago, in Q3 2020, data contributed only 28.3% to total revenues. In Q3 2021, that contribution is up to 38.9%. This has been the trend for years but has accelerated during this pandemic. Voice on the other hand has seen it’s contribution fall from 48.1% in Q3 2020 to 42% this year.

You will have noticed that data is now just 3.2% short beating out voice calls as the top earner

Costs are growing even faster

Zimbabwe remains a hostile economy to operate a business in. So, it comes as no surprise that operating costs increased in Q3 2021. However, it may be a bit surprising to realise that costs grew by 40.9% as opposed to the 15.8% growth in revenue.

Operating costs grew from ZWL$8.9 billion in Q2 to $12.5 billion in Q3. The hyperinflationary economy with its depreciating Zimdollar and forex shortages presents a tough challenge when trying to rein in costs. Getting spares and maintaining their infrastructure when most of these spares can only be found outside the country means rising costs.

Power cuts mean base stations have to be powered by diesel generators and that’s more costly than electricity from the grid. 

That’s not to mention the bandwidth costs that accompany the increased data usage we were celebrating. Or the staff costs that cannot be meaningfully reduced until robots take over most of our jobs. To note though is that depreciation is responsible for a significant portion of these operating costs. After all, equipment does wear and tear when in use and thus loses value.

In absolute numbers, the surplus of revenue over costs (a gross profit of sorts) was $8 billion in Q2 and fell to $7 billion in Q3. 

How the different mobile operators are performing

In this report, POTRAZ did not disclose how the individual mobile operators are performing. We can however assume Telecel is still struggling and that Econet is still king when it comes to revenue share. 

Econet, being a listed company, releases financial statements and we saw how they performed here. Hence the assumption they still command most of the revenue in the industry.

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5 thoughts on “Econet, NetOne, Telecel operating costs growing faster than revenues

  1. With the same incompetent lot back at the helm and greedy, stupid wannabes in the background, this isn’t surprising. Worse will happen, but then, that was guaranteed the second one greedy, stupid idiot mouthed off about not being allocated a seat…

  2. When did we 1st start experiencing bank note shortages? All I know it was a very very very long time ago & we are still in the same boat going into 2022? What does that tell you of our Economy & all who is in charge! If this was the private sector they would have never completed their 3 month Probation. Think about it.

  3. Worldwide the cost of internet has dropped significantly, the biggest cost Telecommunication operator’s pay is the POTRAZ licenses, this cost is then passed on to the client. POTRAZ should reduce the license fees paid by Telecommunication operators thus reducing the costs of data for the struggling Zimbabwean . I don’t buy the costs of spares being expensive, Elon Musk is able to launch self-driving rockets into space and still provide 300 Mbps for less than USD 100. Biggest culprit is POTRAZ, POTRAZ please reduce your fees, taxes etc and help everyone. Make the use of unlicenced bands be truly unlicenced so that anyone can be an ISP. South Africans had to take the Authorities to court so as to get small ISP up and running. We need more competition in the internet space, far too many places dont have connectivity

    1. Sighting Elon Musk in Zimbabwean business is not realistic. Like most US companies, he is gunning for user base growth. Growth and profit do not go increase exponentially together. That’s why businesses like Amazon,Uber etc never made/make a profit after years of operations.

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