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New telecomms tariffs loom as inflation soars

TechnoMag


Telecommunications experts are engaging the Postal and Regulatory Authority of Zimbabwe (Potraz) for another tariff increase as operational costs continue to balloon.

While the price of diesel continues to go north amidst foreign currency disparities, mainly driven by RTGS bond value distortions and FOB prices, fuel prices will continuously rise in Zimbabwe every week.

It is now inevitable; the norm of announcing new weekly prices in fuel has done no good to the industry as it pushes prices of everything else up.

Fuel is a line cost that cuts across all businesses. The realisation of the need to increase its price weekly is an indirect acceptance of weekly inflation, by whatever margin, as the industry is driven by fuel.

Of course, I have always asked the wisdom of banning foreign currency usage when it was apparent, that was the only panacea to solve the fuel crisis.

The government can however not afford to ignore this factor, making it also impossible for them not to review the fuel prices.

If we are to still see fuel being sold in Zimbabwe, the government has to review the prices, but what does this say to the price of other services.

The telecommunications sector has had to strongly rely on generators to keep its base stations running, and this demands more diesel, which unfortunately continues to skyrocket.

The same cannot, however be said of tariff costs which were only increased by 100%, against a fuel price increase of 1000%, in the last 4 months of strong negotiations.

Potraz has effectively dumped the Long-Run Average Incremental Cost (LRIC) model billing preferring the Total Pricing Index (TPI) LRIC model of pricing, meaning they are now considering the actual cost value effect.

This effectively means that we must expect continuous tariff reviews as well, should the same operators remain viable.

However, this will not be the easiest decision for the regulator, but a necessary one for the operators, as the government is also worried about affordability issues.

This brings the whole conversation to affordability versus the sustainability of the industry.

Zimbabwe mobile tariffs compared to the SADC region and other African countries have become insanely too low and no longer make business sense.

In a survey done by TechnoMag, Zimbabwe is currently charging top of 48 cents RTGS per minute which when converted against the bank rate, amounts to $0.042 USD per minute, as at 26 August 2019.

This is actually less than half of a cent in USD value!

Mobile network operators have also raised serious concerns that they will soon be forced to go bankrupt, as they are now operating at a loss, in the past few months.

With the current drop of the value of the pegged prices in RTGS, local operators are creating daily loses for services they actually import in USD value, to serve their market.

Bearing in mind operators actually do pay for voice transmissions and interconnection fees internationally, they are also forced to either terminate the service as this is a strong loss in actual USD value as they settle against the international voice call landing bill.

In South Africa, Vodacom charge of R0.79 (seventy-nine cents) per minute is offered on voice calls to any network at any time, and calls will be billed per second while MTN Charges R1.20 for the first three minutes and get the rest of the call free (MTN-to-MTN only). You will be charged 79c per minute for calls to other networks, billed per second.

Calls from an 8ta mobile phone to both Telkom and Neotel fixed lines will be priced at 65c per minute, independent of the time of the call (hence no peak and off-peak rates).,

On the data, Econet is offering $2 for 40mb, $5.50 offering 250mb while their $11.50 has a cool 2G. The primary networks in South Africa include Vodacom, Cell C, MTN and 8ta.

The South African regulator ICASA’s statistics show Rain’s “One Plan Package” prepaid mobile data offering costs R50 for 1GB of prepaid data, which is half the price of the next cheapest 1GB from Telkom Mobile, at R100, and a third of the price of both MTN and Vodacom’s 1GB prepaid bundles, which cost R149.

The report shows that MTN and Vodacom charge the same prices for a 1GB and a 3GB data bundle at R149 and R299 respectively.

The average gig in South Africa is costing R50, which is an equivalent of $3.58 USD while ours in Zimbabwe is costing 66cents, meaning we are way cheaper than South African prices.