The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has recently sanctioned an increase in the pricing structure for local telecommunications companies. This decision was taken in response to the devaluation of the Zimbabwean dollar, which has been experiencing a significant decline in value. As a result, major telecommunications operators in Zimbabwe have adjusted their tariffs in Zimbabwean dollars (ZWG) to better align with the current economic realities of the sector. However, it is important to note that the tariffs charged in US dollars have not been altered.
The revised tariff rates are now set at ZWG 0.0177 per second for voice calls, ZWG 0.1660 per megabyte for data usage, and ZWG 0.2161 for each SMS sent. The local publication, The Chronicle, has cited opinions from industry specialists who argue that these tariff hikes are critical for the telecom companies to sustain the quality of their services and to ensure their financial viability. An industry insider was quoted saying, “The combination of rampant inflation and the devaluation of the currency has significantly increased operational costs, making the increase in prices an inescapable necessity.”
In September 2024, Zimbabwe’s economic situation led to a drastic measure where the interest rates were raised, and the country’s gold-backed currency was devalued by 43% to combat its ongoing weakness. This devaluation has had a profound impact on various sectors, including telecommunications, which relies heavily on imported equipment and software. Consequently, the costs of providing telecom services have surged.
The telecommunications sector in Zimbabwe has been grappling with numerous challenges, such as shortages of foreign currency, frequent power outages, the devaluation of the local currency, and high rates of inflation. The weakening of the Zimbabwean dollar has made it increasingly difficult for telecom operators to invest in new technology and to maintain a high standard of service quality.
The recent tariff adjustments mean that consumers will face higher costs for communication services. Nonetheless, telecom operators emphasize that these increases are vital for them to continue offering dependable services in the face of escalating operational costs.
In the previous year, 2023, telecommunications companies in Zimbabwe appealed to the government for permission to base their tariffs on the US dollar instead of the volatile Zimbabwean dollar, as a measure to shield themselves from the effects of hyperinflation. Although POTRAZ approved a 50% rise in prices, the operators have expressed that the swift decline in the value of the local currency amidst the economic crisis is still not allowing them to cover their operational costs adequately.
Despite these challenges, the telecom sector in Zimbabwe experienced some growth in the past month. In September 2024, Starlink made an announcement confirming its service availability in Zimbabwe, enabling customers to order and access Internet services directly through the Starlink website.
This development has introduced a new level of competition for the incumbent local telecom operators. Additionally, a recent report has suggested that these operators could face fines of up to $5,000 if they fail to deliver satisfactory service, as per new regulations being enforced.
The updated regulations are designed to safeguard consumers from unreliable telecom services. They set standards to prevent issues such as dropped calls, slow Internet speeds, and delays in message delivery. POTRAZ is tasked with implementing these fines to ensure compliance and protect the interests of the consumers.