Almot Maqolo, Staff Writer 
EXPERTS say the adoption of US dollar-pegged tariffs for telecommunication services could boost the sector’s capacity to invest in critical infrastructure.
The Postal and Telecommunication Regulatory Authority of Zimbabwe (Potraz) recently approved a 100 percent industry-wide Zimbabwe dollar tariff increase with effect from November 1, 2023, saying the move was necessary to ensure the viability of the sector.
This was after significant cost movements were registered for foreign currency-denominated costs, such as foreign exchange losses, and depreciation, which increased in tandem with exchange rate depreciation.
Industrialist, Busisa Moyo
Experts who spoke to this publication said the frequent tariff adjustments in local currency have made it difficult for telecommunications companies to plan investments effectively and maintain stable operations.
Analyst Lloyd Mlotshwa said pegging tariffs in US dollars could help attract foreign investment in the industry.
“The operating cost base for the telecommunication industry including the required investment into critical infrastructure for network development is all hard currency based.
“To sustain high network quality, my view is that a US dollar tariff would have clear advantages for the operators. “From a consumer perspective, I would also like to see a clear and transparent pricing model for services that we can compare to peers across Africa, and this is hard to do in Zim dollars,” Mlotshwa said.
Industrialist Busisa Moyo said a stable pricing framework creates an environment conducive to sustainable economic growth. “
The US dollar allows for better planning and predictability of revenues or rewards for goods and services. “The downside is that a US dollar environment tends to be high cost and attracts imports or offshoring of services to cheaper jurisdictions with softer currencies,” the former Confederation of Zimbabwe Industry’s president said.
“Investors look for stability, viability and sustainability. The US dollar may provide stability, but may not be viable because demand at US dollar prices may be small, we tend to see demand, usage and offtake drop when we switch to the US dollar for the low end of the market. Fully dollarising all sectors of the economy could end in failure.
“People and entrepreneurs respond to incentives. A worthwhile currency does raise and revive the impetus to innovate.” Economist Vince Musewe said the information and communication technology sector is key for economic growth and development. “Companies in that sector must continually innovate and bring in new technologies if we are to keep up. These companies must therefore, be viable and attract the necessary capital,” he said.
“This requires viable service pricing models and pegging to the US dollar would be a positive move to ensure they generate decent revenues. However, we must be wary of profiteering where the ICT companies make huge profits without upgrading their services.”
For the second quarter of 2023, total mobile operator revenues rose 170,5 percent to $435,7 billion from $61,1 billion recorded in the previous quarter. On the other hand, operating costs were up 109,9 percent to $215,8 billion from $102,8 billion recorded in the first quarter of 2023.
Internet Access Providers (IAPs’) revenues appreciated by 136,9 percent to $191,2 billion from $80,7 billion in the first quarter of 2023, while operating costs for IAPs rose 428,8 percent to $224 billion from $42,4 billion in the first quarter.
