The Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) recently approved new tariff thresholds for telecommunication services.
The new tariff thresholds are applicable to services denominated in ZWL, which is the currency to which all tariffs for telecommunication services are pegged. Service packages that are denominated in USD will not be adjusted as the USD currency has remained relatively stable.
Accordingly, any service providers that adjust their USD-denominated service packages will be charging unapproved tariffs and will be liable to a fine. All such violations of licence conditions should be reported to POTRAZ for immediate action.
“The recent review of tariff thresholds for telecommunication services was triggered by the steep depreciation of the ZWL of 738.75% against the USD from USDI: ZWL684.33 in December 2022, to USDI: ZWL 5,739.80 in June 2023. This is reflected in the movement of the Telecommunication Price Index (TPI), which is used to track the cost of providing telecommunication services in ZWL terms. The TPI increased by 528.14% from January to June 2023. The TPI is an internationally recognised and widely used cost-based tariff model;” read the statement from Potraz.
Significant cost movements were registered for foreign currency-denominated costs such as foreign exchange losses, depreciation which increased in tandem with exchange rate depreciation; bandwidth cost which increased by 200%, from ZWL 8 billion in December 2022 to ZWL 23.8 billion in June 2023; software licence fees, fuel, and spares for network maintenance. Local costs such as staff costs increased by 582%, whilst other costs such as marketing, stationery, advertising and rentals increased due to inflationary pressure spurred by the depreciation of the local currency.
As a result, the tariff thresholds that were set in April 2023 were rendered unviable and fell below regional averages. For example, the mobile voice tariff of ZWL94.41 (2 USD cents) per minute, was below the regional average tariff of 9 USD cents. The mobile Internet/ data tariff of ZWL 14.93 (0.32 USD cents) per Megabyte (MB) was also below the regional average tariff of 4.61 USD cents.
Hence the intervention of the regulator to review tariff thresholds by 100%, which is way below the 528.14/% movement of the TPI. This was done in the interest of balancing service affordability and operator viability.