Zimbabwe’s hyperinflation, forex shortage threatens Telcos

In its latest report, Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) recorded an increase in revenues by both mobile telephone networks and internet access providers (IAPs), nonetheless, there is a rise in operating costs leaving the gap much smaller.

“Revenue generated by the mobile telephone networks grew by 26.2% to record (Zimbabwean dollar) Z$2.1 billion from Z$1.65 billion. At the same time, mobile network operating costs grew by 46.1% to record Z$1.4 billion from Z$988.2 million. IAPs revenues grew by 49.6% to record Z$754.3 million from Z$504.1 million. Meanwhile, operating costs for IAPs grew by 80% to record Z$749.4 million from Z$416.3 million,” reads part of the report. 

According to Potraz, a huge proportion of IAPs operating costs consists of bandwidth costs which are paid in foreign currency. Foreign currency challenges have affected network deployment and maintenance as spare parts, equipment and vendor support fees require foreign currency, said Potraz in its report.

The southern African nation is experiencing its worst economic crisis in decades with an annual inflation rate above 800 percent as of March this year, according to the Reserve Bank of Zimbabwe. The local currency has been losing value against its benchmark the United States dollar (USD) since its introduction in 2019.

At black market, the Z$ is trading at 70:1 against the USD. According to Potraz the performance of the sector continues to be dependent on the economic environment. “The economic environment impacts the sector through service demand and consumption levels, operating costs and investment.”

“Given the current inflationary pressures in the economy, operating costs containment will be even more crucial for operators to maintain profitability as the growth of operating costs poses a threat to operator viability,” reads the report.

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