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High costs delay mobile networks’ revenue surge

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POTRAZ

High costs delay mobile networks’ revenue surge. Figures from the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), however, show operating costs increased during the period under review as the sector was not spared from inflationary pressures affecting the economy.

Mobile network operators’ revenue recorded a near double increase of 194 percent to $8,9 billion in the third quarter to September 2020 compared to $3 billion recorded during the previous quarter.

The telecoms sector is a capital intensive business that requires foreign currency for procurement of equipment for expansion and services in addition to other costs.  “Operators in the sector have not been spared by the inflationary environment as evidenced by the rising cost of service provision,” said POTRAZ director-general Dr Gift Machengete in a statement.

“The credit crunch as well as foreign currency challenges have negatively affected network expansion and maintenance as spare parts, equipment and vendor support fees require foreign currency.

“The high cost of international internet connectivity remains a challenge as Zimbabwe is a landlocked country, accessing bandwidth from undersea cables via Mozambique and South Africa,” he said.

Internet access providers (IAP) revenues grew by 148,6 percent to $2,85 billion from $1,15 billion while total operating costs grew by 109 percent to $1,9 billion quarter-on-quarter. Revenue by postal and courier operators advanced by 115,9 percent to $149,9 million as operating costs went up by 86,9 percent to $109,7 million.

During the quarter under review, mobile internet and data traffic grew by 43 percent to record 14 878TB from 10 407TB recorded in the second quarter of 2020. According to the regulator, used international internet bandwidth capacity increased by 16,8 percent.

Internet and data traffic is expected to continue growing due to the increased adoption of e-learning, telecommuting, and e-conferencing that has been accelerated by Covid-19 induced lockdown. Dr Machengete said; “Telecommunications infrastructure and services play a critical role in keeping businesses, governments, and societies connected and running.

“The sector has kept the global economy moving during this Covid-19 era by providing connectivity and resilience, facilitating work-from-home arrangements and keeping individuals and societies connected and informed, with access to essential services.

“As a result, many telecom players providing broadband have benefited from a surge in the internet and data traffic. “Data and internet services will continue to drive industry growth.”

Total mobile voice traffic grew 18,7 percent to 1,56 billion minutes from 1,31 billion minutes recorded in the previous quarter. Fixed voice traffic rose by 12 percent with the bulk of fixed voice traffic generated by corporate lines.

POTRAZ attributed the growth in voice traffic to the upscaling of business operations and the increased number of the workforce back at work following the relaxation of Covid-19 restrictions.

Going forward, the performance of the sector will continue to be dependent on the economic environment. The economic environment impacts the sector through service demand and consumption levels, operating costs and investment.

Foreign currency availability will have an impact on service tariffs for the sector. As such cost containment will remain crucial for operators to maintain profitability while subscriber retention also remains key.

Source – The Herald

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