Tariff adjustments to breathe life into telecom sector
ZIMBABWE’S telecommunication firms have been given a new lease of life after their regulator granted them the authority to charge tariffs that are reflective of their cost of service delivery.
This comes as the government last week – through Statutory Instrument (SI) 185 of 2020 – allowed service providers to peg their prices in United States dollars as well as Zimbabwe dollars at the prevailing exchange rate.
Although the ruling exchange rate was pegged at US$1:ZWL$72 last week, the Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) said service providers in the sector should convert the Zimbabwe dollar prices at the fixed exchange rate of US$1:ZWL$25.
“The USD denominated base tariffs will then be converted at the ruling exchange rate as determined by the auction system, to arrive at ZWL denominated tariffs,” the regulator said in a notice to service providers.
What this means is that mobile network operators will now be charging an average of US$0,06 per minute or ZWL$4 per minute up from the current ZWL$1,50. The new tariff adjustments also come at a time when several councils, bakeries, fastfood outlets and service stations have reverted to 2018 USD prices as a way of keeping afloat under a tough operating environment.
For instance, a litre of petrol is now costing US$1,28 despite fuel prices trading at an all-time low on the global markets, while bread prices are averaging between US$0,80 and US$1.
Market experts believe that although the new telecommunications tariffs are still below the US$0,16 charged a few years ago, they will help local telecoms companies to stay afloat and be able to continue to offer decent service.
“We stopped making new investments a few years ago when we realised that our production costs were now more than what we were making. But now with the upcoming tariffs adjustment, we will be able to invest again and give our customers quality products,” said an official with a state-owned mobile telecommunication company.
Zimbabwe is currently lagging behind in rolling out new information and technology serices such as 5G due to sub-optimal tariffs in the telecommunications industry.
However, POTRAZ acknowledged the infrastructure gap that exists in the country and said efforts were being made to address the challenge and ensure that the country is moving along with international trends.
“The ZWL denominated tariffs shall be reviewed from time to time in line with the auction determined exchange rate movements, as and when necessary depending on the magnitude of the movements,” POTRAZ added.
The southern African country ditched the fixed exchange rate system in June after it had become untenable and adopted an auction system where companies and individuals bid to buy and sell foreign currency.
To date, four auctions have been held with the rate moving from US$1:ZWL56 to US$1:ZWL$72 as of Tuesday last week.