By Alois Vinga
ECONET Wireless Zimbabwe Limited (EWZL) has bemoaned the negative impact of inflation eroded tariffs on operating costs amid a move to inject US$66 million for a network modernisation exercise.
Presenting the group’s performance for the year ended February 28, EWZ board chairman, Doctor James Myers said while the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) has done a commendable job in aligning tariffs accordingly, the rate at which inflation is moving is eroding the tariffs.
“Tariffs continue to fall behind inflation because of rapid changes in the macro-economic environment, this disparity occurs because tariffs for the sector are determined in the local currency, based on movements in inflation and in the exchange rates.
“This puts significant pressure on operating costs on the backdrop of grid power load shedding challenges.
“The prevailing tariff environment is a threat to the long-term viability of the local telecoms sector and curtails the ability of the sector to invest appropriately to meet customer demand, thereby undermining the quality of service,” he said.
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During the period, Myers said the business invested US$66 million as part of its network modernisation program in line with the thrust to support business sustainability, which has been hampered by several years of under investment, due to ongoing macro-economic challenges.
“Group revenue recorded a 20% rise driven by growth in voice and data usage of 19% and 58%, respectively. The Regulator granted the sector three tariff adjustments of 61% each and a fourth adjustment of 50% during the year.
“The tariff adjustments were not adequate to offset the increase in inflation which closed at 230% in January 2023,” he said.
Myers decried the fact that the local currency lost value by more than 85% during the year under review which had a negative impact on overall profitability.
The Group incurred exchange losses of ZWL$77 billion which translated to 23% of revenue against a prior year comparative rate of 6% of revenue.
“The consumption of digital services is expected to continue growing. We have a strong platform to anchor our transition to a fully-fledged digital services provider.
“Exploiting 4G and 5G network enabled opportunities will be key to keep abreast with emerging global trends and improve service delivery,” added Myers.
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