Econet calls for fair tariff regulations

The country’s largest mobile network operator Econet Wireless Zimbabwe has called for fair regulation reflective of the cost structures for the sector, Business Weekly can report.

This should entail a balanced tariff system that enables the operators to provide service without prejudicing them.

A 2023 third quarter sector report has shown that while revenues increased, the sector also battled increasing costs due to inflationary pressures as well as currency and exchange rate volatility.

“Due to the high inflationary pressures, the business is calling for balanced regulation, an important step given the rising operational costs driven by inflation and the shift to using the US dollar. It’s essential to find a middle ground where tariffs remain practical for the business without becoming unaffordable for consumers.

“Regional benchmarks reflect that local telecommunication tariffs remain much lower than the region, despite the country’s cost structures being more demanding and access to foreign currency for infrastructure deployments being a significant challenge for local businesses,” said company secretary Tatenda Ngowe in an update for the third quarter to November 30, 2023.

The challenges also come at a time demand for services such as data continue to increase driven by adoption of digitalisation across sectors. This surge in demand, according to the telecoms giant, also requires constant upgrades in line with increased traffic volumes.

This is in addition to a surge in use of social media with live streaming services and gaming that requires large volumes of data. Ngowe indicated this also requires a supportive tariff regime given the inflation trends.

“In order to sustain the quality of services amidst higher usage rates, there’s a need for tariffs that support the business, especially as inflation impacts capital spending.

“Implementing cutting-edge network technology, optimising spectrum utilisation, and increasing network density is necessary to manage growing data traffic and maintain a resilient network,” she said.

In terms of financial performance, the group’s inflation adjusted revenue for the third quarter under review increased by 177 percent from $0,8 trillion relative to the same period last year.

The growth in voice and data traffic of 28 percent and 26 percent respectively was largely anchored on network modernisation in response to the digital economy’s expansion and the growing need for mobile services, which allowed the business to thrive despite facing external pressures.

The business also invested in solar solutions to counter the negative impact of power outages, while enhanced security systems were put in place to counter theft and vandalism of infrastructure.

During the period under review, exchange losses continued to weigh down the financial performance of the business. For the period under review, exchange losses were 20 percent of revenue against a prior period comparative of 26 percent.

After the successful settlement of debentures in September 2023, the exchange losses exposure was significantly reduced, and this should improve the business performance going forward.

Despite the challenges, the business remains committed to modernise its network service and meet customer demand.

“The business remains committed to complete the current network modernisation initiatives which will transform network performance, expand coverage and increase capacity to support changing customer demands for data-intensive applications.

“The company will leverage on new technologies to enhance the potential for better financial performance through improved customer experience and lower costs,” said Ngowe.-ebusinessweekly