Dim 2019 outlook for telecoms sector

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    HARARE – Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ), has given a dim outlook on the telecoms sector in 2019 warning that the growth of operating costs accrued in Q4 and full year 2018 poses a threat to operator viability and puts pressure on prices.

    “This may in turn impact demand for postal and telecommunication services as consumers reduce usage,” POTRAZ said in its recent sector performance report for the fourth quarter 2018.

    According to POTRAZ report, mobile telephone operators recorded a 5 percent rise in operating costs to $174.8 million in Q4 2018 from $165.5 recorded in the previous quarter.

    “Operating costs also grew by 25.3% to record $660,599,344 in 2018 from $527,345,083 recorded in 2017,” POTRAZ said in its report.

    Likewise, fixed network operating costs increased by 9.4 percent in the quarter under review. The industry regulator highlighted that the performance of the sector in 2019 will be dependent on the general economic environment.

    The economy is currently battling through serious challenges characterised by foreign currency shortages and high inflationary pressures. The recent 2019 monetary policy measures which sought to address currency issues by introducing the local currency RTGS$ and the interbank foreign currency market to address the exchange rate and stabilise prices has yet to bear positive changes.

    According to some local media reports, the network operators are struggling to pay their foreign currency obligations to external service providers for maintenance related costs, a situation which has been attributed to the current poor network connections being experienced in some instances.

    Subsequently, the network service providers have in that respect approached the industry regulator over tariff increases.

    “The economic environment impacts the sector through service demand and consumption levels, operating costs, investment et.al,” said POTRAZ.

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

    POTRAZ said competition in the various service markets is expected to intensify with operators competing on products and service offerings as well as prices through promotional offerings in order to retain subscribers and stimulate demand.

    “However the current levels of market concentration are not expected to change significantly, with Econet and Liquid maintaining dominance of the mobile and Internet Access Provider markets respectively.”

    According to POTRAZ, both fixed telephone lines and mobile telephone registered an increase in total number of subscriptions in the past year as well as growth in revenue.

    Mobile network revenues increased by 36 percent to record $1.156 billion in 2018 from $849.9 million recorded in 2017 while fixed network revenues increased by 16.2 percent to record $135,422,008 in 2018 from $116,571,070 recorded in 2017.

    “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,” said POTRAZ.

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

    -Equity Axis News

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