The first quarter of 2020 witnessed Econet voice, data and SMS on year-to-year declining according to information revealed by the network provider’s company secretary Charles Banda.
The largest telecommunications provider in Zimbabwe reported in the Special Trading Update of voice declining by 5.4%, data by 15.6% and SMS by 6.2%.
Banda says, “Although, data traffic has been increasing since the start of the national lockdown due to more people working from home, making use of digital video conferencing channels, increased e-learning activity as well as the increased social media activity generated by the COVID-19 pandemic, the increase was not sufficient to offset the overall decline in the real revenues caused by the lockdown as well as the declining economic fundamentals.”
Voice and data services constitute over 80% of Econet’s revenue base.
Besides traffic challenges the Econet company secretary also discussed market distortions that have a bearing on the cost of goods and services.
“Within the quarter, the interbank exchange rate increased 38% from ZW$17 to ZW$25 against the United States Dollar whilst the Old Mutual implied rate increased 124% from 45.6 to 102. Although the Old Mutual implied rate is not reflective of the pricing of goods in the market, it is an indicator of the distortions that exist in the market. These distortions have a bearing on the cost of goods and services, including our own,” Banda says.
“The regulator has adopted the Telecommunications Pricing Index (TPI) as the tool for setting tariffs while our costs have been increasing in line with the movements in the formal rate of exchange, albeit, with very little availability of foreign currency.”
“The frequency and responsiveness to market changes have been low and slow, resulting in our real tariffs being severely undermined. This means that we are not able to pay our vendors for software licences and certain upgrades required to increase our capacity and maintain the quality of service that our customers have come to expect from us,” Banda went on.
Econet says the operating environment remains very volatile and uncertain.
“We anticipate that the depressed demand in the wake of the COVID-19 pandemic, depreciating local currency and hyperinflation will continue in the short term,” says Banda.
“The hyper inflationary environment and currency depreciation have depressed the real tariffs and significantly impacted operating costs and foreign exchange losses.”
