• Viability of Zimbabwe's telecom sector at risk due to currency scarcity and limited access to long-term financing.
  • Inflationary pressures force adjustments to pricing models, impacting the cost of services in Zimbabwe's unique economic environment.
  • Telecom operators make significant contributions to Zimbabwe's treasury through tax revenue and employment opportunities, but call for a level playing field with foreign rivals.

Mutare – Zimbabwe's telecom industry faces a growing currency crisis, inflationary pressure, and heavy debt, creating doubts about the sector's ability to fund President Mnangagwa's digital growth ambitions. Operators say investment in crucial network upgrades now depends on securing foreign currency at a time of severe market scarcity.

The Telecommunications Operators Association of Zimbabwe (TOAZ) warns that the viability of the sector, seen as critical for the nation's economy, is at risk. While the government has unveiled a national IT policy focused on expansion, equipment updates to maintain service quality require significant foreign currency outlays.

LEO Satellites: Limited Appeal, Says TOAZ

TOAZ casts doubt on the suitability of low-earth-orbit (LEO) satellite systems, popularized by firms like Starlink, as a broad solution for Zimbabwe.  The association says high costs are likely to limit adoption, especially in rural areas, making LEO networks unsuitable for bridging the national digital divide.

Debt and the Currency Crunch

The need for foreign currency-based investment is a primary concern, yet Zimbabwe's volatile economy offers little access to long-term financing. This is compounded by substantial foreign currency debt taken on for infrastructure upgrades prior to 2018. TOAZ says consultations on solutions are ongoing.

Inflation Derails Pricing Models

Zimbabwe's operators implemented an international pricing model (LRIC) in 2015, meant to gradually lower costs. However, the country's hyperinflation has necessitated adjustments. While acknowledging consumer concerns about data pricing, TOAZ emphasizes that maintaining service quality depends on revenue that reflects the true cost of providing those services in Zimbabwe's unique economic environment.

Sector's Tax Contribution

TOAZ underscores the industry's significant contribution to Zimbabwe's treasury. Operators estimate they provide between 5%-10% of annual government revenue and substantial employment. A 10% excise duty, unique to the sector, is part of their tax burden. However, TOAZ calls for a level playing field should foreign rivals like LEO satellite providers be licensed, arguing they should face similar tax and levy obligations.

Collaboration Seen as Key

TOAZ calls for collaboration between regulators, operators, and consumers to find workable solutions within Zimbabwe's complex economic landscape. The association emphasizes that meeting customer needs while ensuring industry sustainability is paramount for the digital growth the nation seeks.