Telecoms firms feel the pinch as inflation hits revenues

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By Agencies

Zimbabwe telecoms sector has for the first time ever in the past 4 years recorded a major revenue dip while they continue to suffer serious inflationary pressure as the government tightens the noose on price controls.

The latest Potraz sector performance report for the first quarter of 2019 indicated a major revenue decline of $37.1 million, in an already hyperinflationary environment. The figure sends a strong distress signal.

The results of the second quarter cumulatively will show even major revenue decline as inflation sours against costs of networking maintenance and operations.

Experts in the sector have decried lack of price review citing the current tariffs were impeding growth and making it impossible to run the business profitably under the circumstances.

The major problem is being driven by other service providers in the sector who have already sharply increased their services and also the city council rented base station have shot by more 100% .

The last “price review” happened when all telecommunication service providers aligned their prices to the USD equivalent while maintaining the same prices for the USD equivalent.

However, this move seems to have been overtaken by events as the government introduced statutory Instrument 142 which banned the use of the same foreign currency, meaning the rates have only been increased to that last trading date of 1:3 to the dollar.

The same rate has however jumped to an all-time 1:10 meaning the actual pricing has now been distorted and operators cannot get the same value using these old prescribed rates.

Only the national regulator, Potraz can sanction a price increase and telecommunication operators cannot affect this without clearance of the regulator, making their businesses unviable.

Operators are reported to have once again submitted a new price review to the regulator, which unfortunately is still defending its position to allow the USD alignment pricing.

If these tariffs are not reviewed urgently, telcos will soon be running their businesses at a major loss forcing compromised service provision and no service at all as quality service comes at a cost