Zimbabwe’s Econet Wireless is now accessing some of its foreign currency requirements from the official market after the government introduced an auction-based exchange rate regime as part of currency reforms that other industry players say are helping do away with pricing distortions.

Econet is the biggest telco in Zimbabwe and operates alongside state-owned NetOne and Telecel Zimbabwe. The company is balancing tariff adjustments and affordability to manage an economic meltdown exacerbated by COVID-19.

The company said its bids at the weekly foreign exchange auctions have been successful. This is now enabling it to access foreign currency resources for crucial software upgrades, network support services and software license fees.

“The Company welcomes introduction of the foreign currency auction system by the Reserve Bank of Zimbabwe and has been successful in some of its bids on the auction system,” said Econet Wireless this week.

Econet Wireless holds an investment in Liquid Telecommunications which valued at approximately US$135-million and executives at the company say this investment helps it hedge against its foreign currency obligations.

“Our investment in Liquid Telecom is valued in US Dollars at a level higher than our foreign currency obligations,” explained the company.

Costing pressures for Zimbabwean telecom companies had been driven by “the rapid deterioration of the Zimbabwe Dollar against the US Dollar and other foreign currencies” in the past few years.

The local currency has now stabilised after introduction of the auction bids and has been averaging 1:81 over the past few weeks. Stricter control and regulation of mobile money platforms is also starving the parallel market of excess liquidity, with the street exchange rates narrowing.

“We knew what had to be done but it required political buy-in because the measures had to be drastic and it was not an overnight decision. The restrictions on mobile money have been effective and we have also taken a tough stance against excess liquidity on the market,” said a Zimbabwe treasury official on Friday.

However, there has been a public outcry over government moves to throttle mobile money and force mobile wallets to do away with cash-out services. The decision to lower transaction values per day have also been criticised as curtailing payment flexibility.

As disposable incomes have remained under pressure, Econet and the other mobile companies in Zimbabwe are still banking on bundle and promotional offerings to propel network usage as a way of boosting revenue.