Zimbabwe: Econet Suffers Volume Decline

23 January 2020

Mobile network operator, Econet Wireless Zimbabwe, had a nightmarish performance for the third quarter to October 2019 as affordability issues saw subscribers scale down on usage.

Traffic volumes declined across the board from the previous quarter with voice traffic down 8 percent, data traffic 30 percent and SMS traffic 35 percent.

In a quarterly update released recently, the MNO said the decline in traffic volumes followed "the headline tariff adjustments in August 2019 and October 2019".

The business had to "customise consumer packages to maintain affordability in light of the depressed consumer disposable incomes whilst pricing within the confines of responsible business practice".

However, despite this clear evidence that the consumer is constrained, the business believes current tariffs are at "sub-economic levels".

"Our tariff continues to lag behind inflation and given the rapid local currency depreciation since February 2019, the tariffs are now at sub-economic levels," reads the quarterly performance update.

Econet, together with other industry players, said it will continue to engage with Potraz in an effort to go back to a tariff regime that will ensure continued viability of the sector as well as ensure quality of service standards are maintained.

While the consumer might be constrained, sub-economic tariffs will put a constrain on investment outlay, which is critical for a technology driven company such as Econet.

Sub-economic tariffs also threaten the viability of business considering the high operating costs in the economy.

Erratic grid power supply and escalating fuel costs significantly impacted base stations running costs during the period under review, which speaks to the need for economic tariffs.

While the third quarter performance was negative, year-on-year performance for the third quarter 2020 against third quarter 2019 was positive.

Voice traffic volumes were up 20 percent, data up 26 percent and SMS up 7 percent.

According to Econet, the overall performance is reflective of the strong demand in the market for its products and services.

However, going forward, the depreciation of the local currency is expected to negatively impact the financial performance of the group.

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