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Zim Power Blackouts Trigger Turmoil In Telecom Sector

Zimbabwe’s mobile network connectivity was in a bad state over the last weekend, with callers and the transacting public reporting challenges in making calls and getting mobile money transactions to go through.

The disruptive service unavailability comes at a time mobile money services are playing a key inclusive role of bridging the financial divide by providing services to those who have no access to formal banking systems. It is also serving a key role in mitigating for the shortage of physical cash. This also comes at a time mobile and data network provision is seen as the bedrock of global and digital economy.

“I don’t know how many customers we have lost today due to network challenges”, said Mercy Siyachitema, a till operator at a butchery at Tichagariga Shopping Centre in Glen View 3, Harare.

“Customers are failing to make the usual Ecocash payments. And this is at a time we can’t keep meat in the butchery for longer periods of time, as we are running mostly on generator. Stocks have to move fast,” she said.

Mercy is likely not the only small business owner whose business depends on the reliable availability of power, and on mobile connectivity for customers to transact and do business with her. Even the use of POS machines, which use embedded mobile data SIMs, has also been affected by the disruptions.

The challenges in connectivity come at a time both voice and data subscriptions and traffic have been on the decline and their performance will likely get worse if players in the sector continue to be hamstrung by energy related issues, among others.

According to a report by the Posts and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) the telecoms industry recorded a 4% decline in mobile voice traffic from 1.467 billion minutes, to 1.404 billion minutes in the first quarter of 2019.

Active internet subscriptions also declined by 3.3% to 8.4 million, from 8.7 million which saw the internet penetration rate drop by 5 percentage points to 57.9%.

But power challenges threaten to cause a further decline in telecoms product usage in the second quarter of 2019, according to analysts owing to the non-availability of electricity to power mobile network base stations.

Industry sources say they have since recorded the highest number of ‘down times’ at their sites at any given time, due to unavailability of power through load shedding.

“A new record of site down times was actually set last week. As we speak, many sites are down due to ZESA load shedding and fuel stock out,” said a source familiar with developments at one of the country’s mobile network operators.

Players in the industry have resorted to the use of costly diesel generators to power base stations, but current fuel shortages have meant that not all of them can be refuelled on time, said the source, estimating that some of the bigger NMOs were now using over 100,000 litres of diesel per month.

“With the price of diesel now over $5 per litre, you can imagine the huge cost all the operators – especially Econet and NetOne, which have the widest network coverage – are spending on just trying to keep the networks up in the current circumstances of daily power blackouts,” the source said.

The increased cost of doing business has also come at a time the telecoms sector has been charging what are now very sub-economic tariffs, following the movement in the exchange rate after the introduction of Statutory Instrument 142 of 2019.

The local currency through which the telco operators are paid has been severely hit by the exchange rate, which some say has reduced their incomes in real terms by a factor of close to 600% since the new interbank market was introduced.

The move saw the value of the local dollar weaken to an exchange rate of 1:9 from 1:2.5. At current tariffs, local telecoms players will find it very difficult to buy foreign currency, which has become so expensive.

The cost of doing business with local service providers has also gone up, rendering current tariffs very uncompetitive – which have remained the same since the exchange rate between the US dollar and the Zimbabwe dollar.

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