Telecom firms bemoan high service costs

Zimbabwean telecommunication companies say 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%.

TelOne managing director Chipo Mtasa told Parliament’s Information Communication Technology Portfolio Committee that the cost of providing an average broadband connection to homes had increased by about 230% since 2018, adding that the latest tariff review would 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.

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.

Mtasa lambasted government and other parastatals for failing to repay the $101 million debts owed to the State-owned company.

Econet Wireless chief executive Douglas Mboweni, who also appeared before the same committee 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.

Mboweni insisted that in United States dollar terms, tariffs remained lower, adding that access to capital and cost of capital remained relatively high in Zimbabwe when compared to other countries.

According to Mboweni, 65% of operating costs were denominated in forex. These comprised of international transmission (12,7%), local transmission (18,3%), site operation expenses (10,3%), support fees (3%), technical staff costs (4,5%), licence fees (2,1%) and capex (49,1%).

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