Zimbabwe mobile profits fall, putting network quality at risk

Business Writer

Mobile network operators in Zimbabwe saw a decline in profits in 2023, which together with power outages contributed to a worsening of service quality, according to the Postal & Telecommunications Regulatory Authority of Zimbabwe (POTRAZ).

According to POTRAZ Director General Dr Gift Machengete, the revenue to cost rations for the period under review diminished for most operators, which is a signal for profitability loss across the sector.

“Diminished profits in real terms have resulted in deterioration of quality of service, which worsened due to power outage,” noted Dr Machengete in the latest 2023 Annual Sector Performance Report.

He said the hyper – inflationary environment that prevailed in 2023 posed significant challenges across the sector resulting in significant increases in the cost of providing services.

Dr Machengete described the situation as “worrying” and called for “consistent alignment of service charges to the increasing cost of service provision”.

“Unless this problem is addressed, profitability will continue to diminish with implications on sector investment, innovation, and development,” said Dr Machengete.

According to POTRAZ, the country is still lagging in deployment of Long-Term Evolution (LTE) base stations, hence the need to ensure that operators remain profitable to enable them to invest in high-speed networks.

The deterioration of services come at a time demand for Internet/data is expected to grow significantly in 2024 spurred by the growing popularity of data intensive applications such as Netflix, Facebook and TikTok.

Already the sector is recording significant growth with the total number of active mobile subscriptions grew by 4.7 percent to record 14,973,816 in 2023, from 14,300,790 recorded in the previous year.

Resultantly, mobile penetration rate grew by 3.3 percent to record 97.5 percent, from 94.2 percent recorded in the previous year.

Similarly, internet subscriptions are flourishing. There were 11.24 million active internet subscriptions at the end of 2023, a 13.4 percent increase from 9.91 million at the end of 2022. This resulted in an internet penetration rate of 65.3 percent, which jumped to 8 percent by the end of 2023.

Data consumption is skyrocketing as well, with users consuming a whopping 171.21 petabytes (PB) in 2023. This 50.7 percent surge highlights the growing demand for online services.

However, international voice traffic is declining. Incoming international calls dropped by 18.8 percent to 85.8 million minutes in 2023, compared to 105.7 million minutes in 2022. Similarly, inbound roaming minutes fell by 13.2 percent to 2.7 million minutes in 2023, down from 3.1 million minutes in 2022.

The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) attributes this decline to the widespread adoption of alternatives for international communication, such as email, video conferencing, instant messaging, and social media platforms.

POTRAZ recently set new tariffs for the telecommunications industry in the Zimbabwe Gold (ZiG) currency after monetary authorities introduced the new currency two weeks ago.

According to POTRAZ, voice tariffs for mobile network operators have been set at ZiG 0.0098 per second. Data is now selling at ZiG 0.0928 per megabyte while SMS now costs ZiG 0.1207 per SMS.

The new ZiG tariffs reflect an estimated 80 percent adjustment in the local tariffs.