The continued foreign currency shortages from the Reserve Bank of Zimbabwe (RBZ)-run auction system are restricting infrastructure investment into the telecommunications sector amid growth in mobile subscriptions which are putting pressure on existing infrastructure, it has emerged.
According to Douglas Mboweni, chief executive officer of Econet Zimbabwe-the country’s biggest service provider by subscriber base, foreign currency allocations into the sector have been insignificant to meet the quantum of investments needed to sustain smooth operations.
“Allocation of foreign currency towards the telecoms sector has been insignificant from the auction system,” Mboweni told business leaders in Harare recently.
“Ordinarily we should be spending between 15-20 percent of our revenue in capital expenditure but that pre-supposes that you have got access to foreign currency. It’s sad to say that we have actually suffered lack of capitalization in this industry.”
He said the lack of infrastructure upgrade in the sector in the last five years is evident in cities where there has been congestion on existing infrastructure.
This is due to increased number of consumers of digital services.
According to the Postal Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) active mobile telephone subscriptions in the telecoms sector in third quarter of 2021 increased by 3.4 percent to 13.9 million compared to 13.5 million during the second quarter of 2021.
“The telecoms sector is a very critical tool in the development of the economy but I feel it is not being given priority it deserves,” added Mboweni.
Figures from the allocated bid from the auction system show that the bulk of foreign currency has been channeled towards manufacturing and mining sectors.
Despite these challenges, Econet has been leading infrastructure investment in the country.
Last year Econet added 28 new base stations to a total of 5 047 at a time when the telecoms sector is dogged by rising operating costs, acute foreign currency shortages and depressed aggregate demand.
In the second quarter of last year, mobile networks added a total 52 base stations with NetOne putting up 17 base stations, while Telecel added seven, bringing the cumulative total number of base stations in the country to 9 048.
“The necessity for greater investment in digital technologies, skills, resilience and innovation can never be over-emphasized,” Potraz said in its second quarter report.
