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Natasha Chamba, Business Reporter 

MOBILE network operators (MNO) should work on cost containment to consolidate profitability in view of the prevailing inflationary pressures instead of tariff increases, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), has said. 

Zimbabwe has three MNOs NetOne, Telecel and Econet Wireless owned by Zimbabwean billionaire, Mr Strive Masiyiwa.

In a sector performance report for the fourth quarter period ended December 31, 2018, the regulator said improved performance this year will be guided by the general macro-economic environment and urged operators to contain costs.

“The performance of the sector in 2019 will be dependent on the general economic environment. The economic environment impacts the sector through service demand and consumption levels, operating costs, investment and so on.

“Given the current inflationary pressures in the economy, operating cost containment will be even more crucial for operators to maintain profitability,” Potraz said.

The regulator said the growth of operating costs poses a threat to operator viability and puts pressure on prices, which in turn will impact demand for postal and telecommunication services as consumers reduce usage.

In recent times MNOs had proposed an increase of mobile tariffs on the back of the new inter-bank foreign exchange policy. The inter-bank foreign currency trading system is a departure from the previous 1:1 RTGS dollars rate with the US dollar introduced by the Reserve Bank of Zimbabwe last month. 

Potraz has put the demands on halt, arguing that the MNOs demands must be cost based and should be accommodative of the prevailing economic constraints. 

Meanwhile, in the quarterly report Potraz said MNOs’ operating costs increased by five percent to record $174, 8 million from $166, 5 million in the third quarter totalling  $660,5 million in 2018 from $527,3 million in the previous year.

Potraz said competition in the various service markets was expected to intensify as operators compete on products and service offerings as well as prices through promotional offerings in order to retain subscribers and stimulate demand.

However, Potraz projected that the current levels of market concentration is not expected to change significantly, with Econet and Liquid maintaining dominance of mobile and internet access provision respectively.  

“There will be continued momentum around innovation in non-traditional business models such as internet of things applications in order to tap into new revenue streams,” Potraz said.

“Data and internet services will continue to drive industry growth, exceeding the revenue contribution of voice service. Data and internet services will continue to drive industry growth, exceeding the revenue contribution of voice service,” Potraz said.

The report also indicated that the country’s MNOs recorded a 36 percent increase in revenue to $1, 1 billion in the full year to December 31, 2018.—@queentauruszw