USD telecoms tariffs key to improving service quality: analysts

THE adoption of a US-dollar-based tariff pricing model is critical in enhancing telecommunications service quality and network availability with positive benefits to subscribers, industry analysts have said.

At a time when the country’s telecommunications sector is grappling with operational challenges, including high operating costs, outdated infrastructure, and limited access to foreign currency, operators say these factors constrain new investments in network upgrades and expansion programmes, resulting in unsatisfactory customer experience and service quality.

Recently, the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) reviewed telecoms tariffs in the local currency, saying the move was necessary to maintain the industry’s viability.

Analysts, however, believe that allowing telcos to price their services in US dollars would enable them to generate sufficient revenue in foreign currency to improve their networks, bolster service quality and ultimately make the service affordability.

Business analyst Mr Morris Mpala says that pegging prices in foreign currency provides businesses with much-needed stability in their operations, particularly in an environment of rising inflation.

“USD pricing aids business planning as it is a stable currency,” said Mr Mpala, founder of MoB Capital Limited.

“It brings back foreign investors to the telecommunications industry. However, to attract foreign direct investment (FDI), we need to address key fundamentals such as a stable exchange rate, ease of doing business, reasonable operating costs, a solid and cost-effective financial services sector, and ease of repatriation of capital and dividends.”

Mr Mpala further emphasized that USD pricing, if implemented, would foster innovation and attract more consumers to telecommunications products and services.

“When it’s a stable currency and the sector is profitable, disruptive innovation will follow and bring it up to world standards,” he asserted.

“Above all, these services must be affordable to attract a wider consumer base, making it more lucrative to invest in modern infrastructure to offer world-class services.”

Mr George Nhepera, a renowned financial market analyst from Bulawayo, concurred, highlighting the planning benefits of USD pricing while acknowledging the need for consumers to have alternative payment options.

“Adopting the US dollar as the currency for pegging tariffs helps in planning and avoids unnecessary adjustments associated with local currency,” Nhepera stated.

“Nevertheless, users (customers) should still be given the freedom and choice to purchase in either of the multiple currencies.”

Mr Nhepera also advocated for the migration of businesses to the Victoria Falls Stock Exchange (VFSE), which is denominated in US dollars.

This move, he believes, would attract foreign investment by making it easier for investors to value their shares and businesses.

“In my view, what will help to attract foreign investments in the telecommunications sector is migration of the entities currently listed on Zimbabwe Stock Exchange to Victoria Falls Stock Exchange, which allows the shares to be denominated in USD currency,” said Mr Nhepera.

“To the outside investor, it becomes easy to value the shares and business, then be able to make a proper and informed investment decision.”

The VFSE, a subsidiary of the Zimbabwe Stock Exchange, was established in 2020 and pegs its investments to its users in US dollars.-chronicle