Econet drives growth in data, internet usage
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Zimbabwe Stock Exchange (ZSE) listed mobile network operator Econet drove the overall growth in mobile data and internet usage in the telecoms industry during the second quarter of 2023, after volumes closed the period 11,6 percent above the previous quarter.
Due to the growing adoption of digitalisation in the country, which was also spurred by the Covid-19 pandemic, broadband and data services demand across the country continues to increase, which is positive and a clear pathway for growth.
According to figures from the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), the quarter to June 30, 2023 had a record 42,058.3 terabytes compared to 37,690.4 terabytes recorded in the first quarter of 2023.
During the period, Econet was the only mobile operator to record gains in data usage, with a 19,7 percent increase. Conversely, peers NetOne and Telecel recorded declines in traffic by 4,7 percent and 56,5 percent, respectively.
“Total internet and data traffic for mobile network operators increased by a significant margin, owing to growth in traffic by Econet,” said Potraz in a sector performance report for the quarter under review.
The growth in Econet’s traffic subsequently resulted in a 2,8 percent increase in market share, whereas NetOne and Telecel lost Internet and data traffic shares by 4,7 percent and 0,1 percent respectively.
In terms of traffic for the period, NetOne and Telecel dropped by margins of 4,7 percent and 56,5 percent respectively.
Despite the growth in the traffic in the sector and Econet in particular, the obtaining challenging environment continues to weigh on operations.
According to market watchers, minimal US dollar collections and the significant Zimbabwe dollar exposure of the business from a revenue perspective in a high inflation, volatile exchange rate environment, will continue to significantly impact the financial performance and the ability to invest in new equipment.
The telecoms sector relies on imports for equipment and software for operating purposes.
Another challenge unique to the sector alone is the misalignment in the review of tariffs relative to inflation and real costs, which will continue to impact revenue and profitability creating downside risk to the business.
Tariffs have continued to lag, threatening the long-term viability of the local telecoms sector and making it difficult for the sector to invest appropriately to meet customer demand.
Potraz has acknowledged the challenges being experienced in the sector that threaten viability. While revenues for the sector continue to increase, operating costs are also rising by significant margins affecting profitability.
“Most of the operators incurred operating costs growth which was more than their revenues growth in the second quarter of 2023. This directly means that most operators made losses in the trading quarter.
“As in its nature, the telecoms industry requires huge capital outlays across networks, this cannot be achieved whilst the sector operators are running losses. Investments per operator have drastically decreased due to reduced revenue to cost ratios (RCR).
