The Telecommunications Operators Association of Zimbabwe (TOAZ), the industry body that represents Zimbabwe’s telecommunications companies, has petitioned the country’s parliament to change the law so that operators can charge economically sustainable tariffs.
At the moment the sector’s tariffs are determined in local currency. TOAZ chairman Lawrence Nkala has asked Parliament to allow the industry to peg its prices to US dollars, to hedge against exchange rate movements.
As the Zimbabwe Herald points out, many businesses, traders and parastatals are now indexing most of their goods and services in foreign currency to hedge against the currency fluctuations and inflation affecting the Zimbabwe dollar.
The country’s telecommunications industry is currently faced with numerous challenges, including foreign currency shortages, foreign currency debt and relatively low tariffs in comparison to rising costs.
To make matters worse, the main Zimbabwean telecommunication players all have significant debts. However, foreign currency availability for servicing foreign suppliers is a major challenge. This has also held back overdue investment in network maintenance and capacity enhancements.
Power costs are another problem. The power grid is unreliable; therefore companies are forced to purchase fuel for diesel generators to power base stations.
As we reported at the time, the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) last month permitted an increase in tariffs by 50% to allow operators to recoup some of their costs and re-invest in infrastructure development.
This isn’t an unusual occurrence; price rises were reported in July last year and September 2021.