Forex crunch hampers Econet expansion
ZIMBABWE’S largest mobile phone operator by subscription, Econet Wireless, says it has slowed down its expansion projects owing to limited access to foreign currency.
Many formal businesses are accessing foreign exchange from the auction system run by the central bank, but complaints over settlement delays have become rampant. The delays, according to business leaders, have been affecting procurement and other obligations payable in hard currency.
“As previously reported, significant foreign currency losses continue to be recorded due to the weakening exchange rate which deteriorated by 172% for the quarter under review,” Econet says in its trading update for the first quarter ending May 31.
“Our access to foreign currency remains severely constrained, creating further challenges in implementation of necessary network upgrades to assure the continued level of high quality service experienced by our customers.”
Despite having limited access to foreign exchange, Econet became the first mobile network operator to roll out 5G service in Harare towards the end of the last financial year.
In the quarter under review, 5G service was further rolled out in Bulawayo during the Zimbabwe International Trade Fair (ZITF 2022) and in Victoria Falls as well as in Chitungwiza, bringing the total number of 5G sites rolled out to 22.
The business added 100 new 4G sites to improve network and speed of data connectivity.
“Persistent national grid power outages have affected network quality and reliability, thereby necessitating us to increase our efforts to augment our power supply with solar power. However, as inflation increases and disposable incomes are coming under more pressure, there is a discernible increase in the theft of diesel, batteries and solar panels,” the company says.
“In response, we have enhanced security at our sites to counter the effects of increased vandalism and theft. In line with our broad strategy to enhance the digital lifestyles of our customers, more focus and attention was directed towards gaming, music and entertainment to create more platforms for entertainment and revenue streams for artists.”
Voice and data traffic for the period under review grew by 6% and 18% respectively, over the previous quarter.
“This growth was achieved largely due to our customer acquisition strategy. The telecommunications sector was granted a staggered tariff adjustment by the regulator of 61% in July 2022, and a further 61% with effect from 1 September 2022, and a further 61% with effect from 1 November 2022,” the company says.
“The tariff adjustments will cover voice, SMS, data and internet services and are determined in the local currency. The company is now selling some of its products in United States dollars, having received the requisite approvals.”