The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) has released the ICT sector report for Q1 2023. There isn’t much that will shock you in there, it pretty much picked up where Q4 2022 left off.
It appears mobile network operators (MNOs) are on the cusp of pulling in more revenue from data than from voice. That’s been the case for some years now, slowly but steadily.
In Q1 2023, mobile voice traffic declined by 16% from 3 billion minutes in Q4 2022, to 2.5 billion minutes. That is quite a significant 500 million-minute drop in voice traffic.
500 million minutes are worth around ZW$47.2 billion (US$6 million) today. The ZW$ has lost much of its value since Q1 2023 but the US$6 million figure should give us an idea of how much revenue the MNOs lost because of the drop in voice traffic.
Potraz says the drop in voice traffic may have been caused by the 50% tariff hike in February. I would agree that it contributed, however, mobile data usage increased in Q1, despite the same tariff hike. So, there is more to it than just the tariff hike.
Potraz also pinpoints two other factors that may have caused the drop:
- Substitution of voice with over-the-top services like WhatsApp
- Deteriorating quality of service due to load-shedding
This sounds more like it. People are getting more comfortable communicating via services like WhatsApp, even for business communications. I know at Techzim we rarely use traditional voice any more.
We also see Potraz acknowledge that it is not in our brains – service quality really has deteriorated. I can’t count how often I have struggled to hear the person I’m talking to on a voice call, only for the call to drop at the end.
Of the shrinking voice traffic pie here is how much market share each MNO had in Q1:
- Econet – 81.8% (down from 84.4%)
- NetOne – 17.7% (up from 14.9%)
- Telecel – 0.5% (down from 0.7%)
On the other hand, mobile internet and data traffic increased by 12.3% from 33.6 terabytes in Q4 2022 to 37.7 terabytes.
We know that there were 9.2 million active internet users in Q1. So, if we assume that’s mobile internet users, we find that each Zimbabwean used about 3.8GB in Q1. Or 1.3GB per month. That would actually be up from the 500MB per month we used in 2022.
That would support Potraz’s conclusion that Zimbos are substituting voice with services like WhatsApp. As voice declines, data usage is increasing.
Econet saw a significant 7.2% drop in data traffic market share in Q1, going from 74.5% in Q4 to 67.2%. In a country where voice traffic is declining, you do not want data traffic to be falling too.
The report does not disclose whether or not Econet saw absolute data usage figures decline but they now have a smaller piece of the pie.
- Econet – 67.2% (down from 74.5%)
- NetOne – 32.6% (up from 25.3%)
- Telecel – 0.2% (did not change from the previous quarter)
The above led to mobile revenues increasing by a cool 34.8% whilst operating costs grew by 25.7%.
We know that voice and data contribute the bulk of mobile revenues. Potraz won’t tell us the actual splits anymore, but we know those two contribute at least 80% to MNO revenues.
So, a 12.3% increase in data traffic and a 16% decline in voice traffic still led to revenues growing by 34.8%.
I think this is where we have to remind ourselves that the revenue being talked about here is denominated in ZW$. That currency has been losing value and inflation has been roaring. This means that revenues in USD terms may have decreased despite the 34.8% increase in ZW$ terms.
A rough calculation shows that revenues went from ZW$119.5bn (US$125.8m using 1:950 which was prevailing in Dec 2022) to ZW$161bn (US$123.8m using 1:1300). A US$2m drop.
This looks like the more accurate picture. If voice traffic fell by 16% and data usage increased by 12.3%, you would expect to see a decline in revenues.
That may be but it is encouraging to see that the MNOs have arrested spiralling operating costs. In most of 2022, operating costs were increasing at a faster rate than revenues. In Q1 2023 that was not the case as we highlighted above.