We Are Operating At A Loss: Telecom Firms
The World Bank has cut its growth forecast for Sub-Saharan Africa this year to 2.8 percent from an initial 3.3 percent, it said on Monday. The bank’s 2019 forecast means economic growth will lag population growth for the fourth year in a row and it will remain stuck below 3 percent, which it slipped to in 2015.
Telecom companies yesterday said the costs of delivering services are still excessively high despite a recent tariff hike which saw data and voice charges go up by as much as 150%.
Speaking during Parliament’s Information Communication Technology Portfolio Committee hearing TelOne MD Chipo Mtasa said the cost of providing an average broadband connection to homes had increased by about 230% since 2018.
She added that the latest tariff review can barely cover the company’s cost of providing services.
“More than 90% of inputs required to provide services are imported. Government has not prioritised foreign currency allocation. With the shortages of foreign currency, TelOne’s operating cost will increase in line with the interbank rate. This will have an impact on tariff reviews, going forward,” she said.
Zimbabwe hiked fuel prices by approximately 150% in January as government battles with crippling shortages that have seen motorists sleep in fuel queues. Back then the government said they will also cushion business and consumers from an expected new wave of price increases for basic products and transport fares.
Mtasa said the telecoms sector was not a beneficiary of fuel rebates, adding that although management had put in place measures to reduce on fuel usage, the increase in prices from $1,42 to $3,30 per litre would push total fuel costs for the organisation from the budgeted $1,5 million to $3,1 million this year.
Econet Wireless CEO, Douglas Mboweni, said operators were charging data tariffs that were way below the cost of services provision.
“The key inputs that are considered in coming up with the cost build-up per product are well-defined. Direct costs are those that are incurred in directly operating the network such as transmission, vendor support, licenses, network payroll, site security, site rental, among others. Overheads comprise support services required for the running of operations such as finance and human resource costs and customer experience, among others,” Mboweni said.