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Telcos in Zimbabwe Adjust Tariffs as Currency Devaluation Continues

October 23, 2024

Telcos in Zimbabwe Adjust Tariffs as Currency Devaluation Continues

Telcos in Zimbabwe adjust tariffs as currency devaluation drives up operational expenses. This comes after the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) reportedly approved a tariff adjustment for local telecom companies due to the recent drop in local currency value.

Major operators in the country have implemented ZWG tariff adjustments to reflect the sector’s economic conditions. Meanwhile, the US dollar tariffs remain the same.

The new tariffs include ZWG 0.0177 per second for voice calls, ZWG 0.1660 per MB for data, and ZWG 0.2161 per SMS.

According to the Chronicle, industry experts believe that tariff increases are necessary for telecom companies to maintain service quality and financial stability. “With soaring inflation and currency depreciation significantly driving up operational expenses, the price increases became unavoidable, ” an insider noted.

In September 2024, Zimbabwe raised interest rates and devalued its gold-backed currency by 43% in response to persistent weakness. The devaluation has significantly affected sectors, including telecommunications, which depends on imported equipment and software, leading to skyrocketing service costs.

Over time, the telecom sector has faced challenges including foreign currency shortages, power outages, local currency devaluation, and high inflation. The depreciation of the ZWG has further made it harder for operators to invest in new technologies and maintain the quality of service.

While this development means higher costs of communication services for customers, the telecom operators stress that the increase is essential to continue delivering reliable services amid rising operational expenses.

The petition in 2023

In 2023, telcos in Zimbabwe petitioned the government to allow them to peg their tariffs in US dollars rather than the local Zimbabwe dollar to protect them from hyperinflation. While the telecoms regulator POTRAZ approved a 50% increase in prices, operators maintained that the rapid depreciation of local currency during the ongoing economic crisis prevents them from covering their costs.

In the last month, the Zimbabwean telecoms sector has seen some growth. In September 2024, Starlink officially announced its availability in the country, meaning users can order and access the Internet service directly from the Starlink website.

This has intensified competition with the local telcos in the country. Meanwhile, a report indicated that the telcos could be fined up to $5,000 for delivering poor service under new regulations.

The revised regulations aim to protect users dealing with unreliable services, including preventing dropped calls, ensuring fast Internet, and timely message delivery with the Postal and Regulatory Authority of Zimbabwe (POTRAZ) enforcing the fines.

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