Telecoms firms bullish about near-term prospects

PLAYERS in the telecommunications industry expect to continue investing in capital programmes and foresee an improved operating environment next year on the back of the prevailing stable macroeconomic conditions prevailing in the economy.

The prevailing macroeconomic stability follows various policy measures instituted by the Government in 2023 to bring inflation and the then volatile exchange rate under control.

The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) revealed the bullish sentiments about 2024, expressed by telecom sector operators, in its 2023 third-quarter sector performance report.

The first half of 2023 was largely characterised by runaway inflation and excessive pressure on the local currency which constrained telecoms companies’ capacity to invest in infrastructure and operations.

The Zimbabwe dollar suffered significant depreciation as the parallel market exchange rate plummeted in the period May to June 2023.

Potraz said telecommunications companies in Zimbabwe expressed hope going into 2024 on account of prevailing macroeconomic stability following various interventions by authorities.

Mobile network operators’ total capital expenditure in the third quarter of 2023 paced up 27,1 percent to $33,9 billion compared to $26,7 billion in the second quarter of the year.

However, according to Potraz, the capital expenditure did not increase in real terms, and the same applies to revenues, which restricted new investments in infrastructure as evidenced by a decline in new terrestrial deployments.

“The ongoing contractionary monetary and fiscal policy measures are expected to stabilise the macroeconomic environment, which is necessary to facilitate investment in the sector.

“As investment levels and economic well-being improve, it is expected that demand for services will increase and boost the performance of the sector,” said Potraz director general, Dr Gift Machengete in the report.

He indicated that the digital transformation driven by organisations and businesses will continue to anchor the demand for ICT solutions as entities require technological advancements to adapt to the changing business landscape.

“With the increasing need for businesses to undergo digital transformation, positive sector growth is anticipated. The tariff reviews initiated are expected to improve Revenue-to-Cost ratios (RCRs).

“This will spur increased investment by operators and enhance service delivery through improved coverage and quality of service,” he added.

Adaptation to digital transformation is expected to create opportunities for ICT companies to continue to offer innovative products and services, including cloud computing, artificial intelligence, big data analytics, and Internet of Things (IoT) solutions.

Technology expert Mr Weston Zvinairo said the stable macroeconomic environment gave companies a chance to plan and execute capital projects, contrary to when an economy was going through turbulence.

Mr Zvinairo said digital transformation created a positive growth environment for the ICT sector by driving demand for innovative solutions, increasing investment in ICT infrastructure, and enabling new business opportunities.

“A stable economy is an integral part of growth and development in any country, the telecommunications industry included in that same regard, so we hope the said stability prolongs.

“Digital transformation is generally positive for the growth of the ICT (Information and Communication Technology) sector.

“Digital transformation involves the integration of digital technologies into all areas of a business, resulting in improved efficiency, productivity, and innovation,” said Mr Zvinairo.

Zimbabwe’s telecoms sector however still faces challenges like inadequate foreign currency resources that are required to upgrade, expand, and maintain telecommunication networks.

Additionally, the sector is still heavily affected by operational realities that inhibit sector growth including power outages, which increase the cost-of-service provision.

“As investment levels and economic well-being improve, it is expected that demand for services will increase and boost the performance of the sector”.-herald