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AfricaBusiness & FinanceZimbabwe

Growing telecoms sector costs squeezing margins – POTRAZ Report

By Almot Maqolo

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The growth in operating costs of the telecommunications industry outpaced growth in revenues during the first quarter of 2020, a Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) industry update shows.

According to the Postal & Telecommunication Sector Performance Q1 2020 update, total sector revenue grew by 26.2% to record $2.1 billion from $1.65 billion recorded in the previous quarter. On the other hand operating costs increased by 46.1% to record $1.4 billion from $988.2 million recorded in the previous quarter.

The industry regulator noted that voice service was the core revenue contributor for the mobile networks. POTRAZ said the performance of the sector continues to be dependent on the economic environment. “The foreign currency challenges have affected network deployment and maintenance as spare parts, equipment and vendor support fees require foreign currency. Furthermore, the credit crunch also negatively affected network expansion,” it said.

“The high cost of International Internet Connectivity remains a challenge as Zimbabwe is a landlocked country, accessing bandwidth from undersea cables via Mozambique and South Africa.” Given the current inflationary pressures in the economy, POTRAZ said, operating cost containment will be more crucial for operators to maintain profitability, as the growth of operating costs poses a threat to operator viability.

MAJOR HIGHLIGHTS 1. The total number of active mobile subscriptions increased by 4% to reach 13,724,522 from 13,195,902; hence, the mobile penetration rate increased by 3.6% to reach 94.2% from 90.6%.

2. Active fixed telephone lines declined by 1.8% to record 260,959 from 265,734; the fixed tele-density remained at 1.8%.

3. Active internet and data subscriptions also declined by 2.5% to record 8,614,009 from 8,836,299. As a result, the Internet penetration rate declined by 0.7% to reach 59.1% from 60.6%.

4. Total fixed voice traffic declined by 6.9% to record 112.1 million minutes from 120.35 million minutes.

5. Total mobile voice traffic declined by 4.7% to record 1.33billion minutes from 1.4billion minutes.

6. On the other hand, mobile internet and data traffic increased by 2.8% to record 6,661TB from 6,489TB.

7. Used International Internet Bandwidth Capacity also increased by 8.2% to record 124,627 Mbps from 115,212 Mbps.

8. Total postal and courier volume declined by 1.1% to record 1,342,957 items from 1,357,364.

9. IAP revenues grew by 49.6% to record $754.3 million from $504.1 million; meanwhile, operating costs for IAPs grew by 80% to record $749.4 million from $416.3 million. 


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