Zimbabwe’s telecoms industry struggles to stay connected

Zimbabwe’s telecommunications industry, once a beacon of progress in the region, finds itself gasping for air.

The Telecommunications Operators Association of Zimbabwe (TOAZ), representing the country’s major mobile network operators, issued a stark warning: a multitude of challenges threaten to stifle growth and limit internet access for millions of Zimbabweans.

At the heart of the industry’s struggles lies a suffocating lack of foreign currency. Acquiring the necessary funds to purchase essential equipment and upgrade infrastructure has become an uphill battle.

During the foreign currency auction era, telcos had no access to foreign currency despite the need for substantial foreign currency investments, according to Econet Wireless Zimbabwe Deputy Chief Executive Officer Roy Chimanikire who presented on behalf of TOAZ at a recent Potraz Stakeholders Engagement Indaba.

While the economy has now largely dollarised, and telcos can charge in US dollars, currency distortions meant that ZWL tariffs, last adjusted in October 2023 were too low leaving most consumers still preferring to pay in ZWL.

The forex challenges are also associated with limited access to long-term and affordable debt. The cost of US dollar capital range between 12 and 14 percent according to Never Ncube – Chief Executive Officer at Dandemutande Investments, who presented on behalf of Internet Service Providers.

A significant portion of telecoms technology is imported, and with foreign currency in short supply, securing these vital tools becomes a bureaucratic maze.

In its press release, TOAZ paints a grim picture, highlighting the widening gap between the industry’s needs and its ability to access the foreign currency required to meet them.

The result, according to TOAZ presentation by Chimanikire, has been support equipment being made redundant

due to withdrawal of support by original equipment manufacturers such as Ericsson and ZTE.

Chimanikire added that “outdated software can cause security vulnerabilities and poor functionality”.

“Inability to access necessary spares on time results in prolonged service outages,” said Chimanikire.

This foreign currency squeeze isn’t the only obstacle the industry faces. The rising tide of operational costs threatens to drown any remaining profits.

Factors like the ever-increasing cost of fuel for backup generators, coupled with general inflation, are creating a relentless financial strain.

TOAZ reveals a concerning statistic: operating costs have grown by a staggering 62.3 percent, far outpacing revenue growth, which sits at a meager 27.8 percent.

This financial imbalance makes it nearly impossible for telecom companies to reinvest in their networks, hindering essential upgrades and improvements.

Adding to the industry’s woes is the specter of frequent power outages. Zimbabwe’s ongoing power crisis throws a wrench into the smooth operation of telecommunications networks.

The TOAZ emphasizes how these outages not only disrupt service but also force companies to rely on expensive backup generators.

This constant reliance on generators creates a vicious cycle, further draining already limited financial resources.

As if these challenges weren’t enough, the telecommunications industry also contends with the burden of high service provision taxes and levies. TOAZ highlights these taxes as a significant weight on the industry’s shoulders.

According to Chimanikire’s presentation, 35 percent of revenue is paid in statutory payments.

These financial obligations act as a siphon, diverting funds away from crucial network investments and expansion projects.

The money that could be used to improve internet speeds, expand coverage, and bridge the digital divide is instead directed towards government coffers.

Streamlining service provision taxes and levies could free up much-needed funds for network improvements.

TOAZ called for tax rebates and incentives to “ensure viability and sustainability of the sector” .

The combined effect of these challenges is a telecommunications industry struggling to stay afloat.

Limited investment leads to slow internet speeds, unreliable service, and a widening digital divide, particularly in rural areas.

Students in these areas are most affected, with online learning opportunities becoming a distant dream due to slow or unavailable internet.

Businesses that rely on the internet for communication, sales, and other operations are also feeling the pinch, with unreliable service hindering their ability to function effectively. Perhaps the most profound impact is on the social fabric of the nation.

Limited and unreliable internet access makes it difficult for people to stay connected with friends, family, and colleagues, creating a sense of isolation and hindering communication.

The path forward for Zimbabwe’s telecommunications industry requires urgent action from the government and stakeholders.

Solutions could include finding ways to ease the foreign currency crisis, perhaps by facilitating increased access for the industry or exploring.

Investing in renewable energy solutions like solar power could provide a more reliable and cost-effective way to power telecom towers, especially in remote areas. To achieve this, TOAZ called for

“policies that facilitate renewable energy substitutes for grid power and diesel.”

Zimbabwe’s telecommunications industry plays a vital role in the country’s economic development and social fabric.

It connects businesses, empowers students, and keeps families in touch. By addressing the challenges highlighted by TOAZ, the government and stakeholders have an opportunity to ensure that all Zimbabweans have access to reliable and affordable internet services.

This will not only bridge the digital divide but also pave the way for a more connected and prosperous future for the nation.-ebusinessweekly