Zim sets price floors for mobile tariffs

(Duncan Alfreds, Fin24)
(Duncan Alfreds, Fin24)

Harare - Zimbabwe's telecoms regulator, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), has set floor prices for voice and data services including promotional packages.

"The floor price for traditional voice services shall be set at 12 US cents per minute," said Protraz in a statement seen by Fin24 and reported on by the state newspaper The Herald.

"The floor price for data shall be set at 2 cents per megabyte," it added.

A floor price is a government- or group-imposed price control or limit on how low a price can be charged for a product.

According Potraz, "the floor prices shall go a long way in addressing the apparent under-pricing of voice and data services that was characteristic of data bundles and promotions that were being offered by operators.

"This means the mismatch between the rate of growth in data traffic and data revenues can be addressed to ensure the viability of operators," said Potraz. It added that the move will help improve the quality of service by reducing network congestion, which will in turn improve quality of experience.

Over the years, the Zimbabwean telecoms market has been characterised by price wars which have seen some data services priced well below 1 US cent per megabyte.

The country's leading telecoms company Econet is also on record as saying that price wars were damaging the industry.

At its annual general meeting in 2014, Econet CEO Douglas Mboweni said the company wouldn't follow its competitors in engaging in price wars, as it believes such a strategy is dangerous to the long-term goals of the business. 

"Our packages are sustainable and provide a solid base for the future of the business,'' said Mboweni at the time.

Among other issues, tariff wars have seen revenues from the telecoms sector coming down by between 10% and 12% per quarter since the beginning of 2016.

Analysts however see government's move as a way of protecting its revenues from the sector, which have been coming down for the past three years as operators reported declining profits with price wars also playing a part to the reduction.

In 2013, Econet Wireless Zimbabwe paid $106m in tax, but it only paid $27m in 2016 as profits fell.

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