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Free-falling Zimbabwe currency prompts telecom tariff hikes

By , Sub Saharan Africa Business, Tech, News and Development Journalist
Zimbabwe , 28 Apr 2023

Telecom companies in Zimbabwe have hiked tariffs to cushion themselves against a free-falling local currency and intensifying foreign currency shortages.

Zimbabwe’s currency this week lost value against the US Dollar, falling by more than 70%, prompting telecom companies and internet service providers to effect new increases on services.

Econet, NetOne, and Liquid Telecom have all increased pricing for their services as they seek to protect their operations in volatile market.

Liquid said: “Potraz approved an industry-wide 50 percent tariff increase in February and another 50 percent effective April 1, 2023” for telecom products and services.

In a telecom sector report for 2022, Potraz acknowledged “rising operating costs across all subsectors, owing to the inflationary” economic environment.

“Total postal and telecommunication sector operating costs amounted to ZWL278.1 billion in 2022, up from ZWL65.7 billion recorded in 2021, giving an annual variance of 323.3% and an inflation adjusted growth rate of 44.3%. Overall, operating costs grew by a bigger margin than the growth in operating revenues, owing to the inflationary operating environment,” said Potraz.

Economists anticipate the currency and economic volatility in Zimbabwe to intensify ahead of elections scheduled for August this year. 

This, they say will likely further strain consumer disposable incomes resulting in low volume usage of telecom services.

“Investors will be watching closely the pre-election spending and the trajectory of domestic ZWD and US dollar availability in the months ahead. In the event of a peaceful post-election outcome, there is scope for a flattening of the volatility surrounding local units,” said Chiedza Madzima, Fitch Solutions’ head of research for Africa.

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