Telecoms sector posts revenue growth

 Telecoms sector posts revenue growth
Published: 07 October 2019
Zimbabwe's telecommunications sector registered growth in revenues for the quarter ending June 30, 2019, mainly on the back of upward tariff reviews as economic headwinds persisted.

The sector, like any other industry in Zimbabwe, has been exposed to a challenging economic environment characterised by inflationary pressures, erratic power supplies that affect network services as well as foreign currency shortages for procurement of essential equipment and network upgrade.

Several currency reforms were also effected since beginning of the year such as the introduction of the Zimbabwe dollar as the sole trading currency and the banning of the multi-currency system. These have had a knock-on effect on businesses.

According to the Postal and Telecommunications Regulatory Authority (Potraz) sector performance report for the quarter under review, mobile network operators registered a 50 percent growth in revenue to $375 million from $249,9 million in the previous quarter.

This was against a 25 percent growth in operating costs to $233,7 million from $185,9 million recorded in the previous period on the back of increases in cost of products and services as inflation set in. At $67,3 million, fixed telephone revenue was 58 percent above previous period as contribution of data increased while voice revenue declined.

Significant growth was also recorded in IAP revenues that jumped 85 percent to $137,7 million from $74,4 million, against an 84,6 percent growth in operating costs to $111 million.

Potraz director general Dr Gift Machengete acknowledged the challenging operating environment which also affected the postal and telecommunications sector during the quarter under review.

Since beginning of the year, consumers have been subjected to increases in products and services, also effected on the postal and telecommunications sector. Resultantly, an upward review in tariffs was effected which drove revenues growth.

"The overall growth in revenue may be attributable to the increase in tariffs in the quarter under review as well as the transition from the multi-currency era, as some foreign currency denominated income is now subjected to conversion at the official exchange rate," said Dr Machengete during presentation of the sector performance report in the capital.

During the quarter under review, the country's largest mobile network operator, Econet, lost revenue market share by 1,1 percent while NetOne gained market share by 1,1 percent whereas Telecel's market share remained unchanged. Total capital expenditure by all the mobile operators suffered a 93,1 percent decline to record $1,58 million from $22,97 million in the first quarter of 2019.

Potraz attributed the decline to the transition from the multi-currency system as business adopts a wait and see approach coupled with the credit squeeze.

Total voice traffic for mobile operators came in 1,1 percent lower at 1,39 billion minutes from 1,4 billion minutes recorded in the first quarter. On the other hand total number of voice traffic processed by the fixed network declined by 5,5 percent to record 113,7 million minutes.

The quarter under review also saw a marginal increase in active mobile subscriptions of 1,8 percent to 12,35 million from 12,13 million. Going forward, the obtaining economic environment will have an impact on the sector's performance. Like any other businesses, the sector is expected to employ cost-cutting measures as well as be innovative to maintain market share for them to remain viable.

Potraz has acknowledged that the current power supply challenges have negatively affected the sector in terms of service provision, lost potential revenue and increased costs brought about by the use of alternative power sources like generators, in an environment of rising fuel costs.

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