Tuesday, January 30, 2018

Econet to leave Zimbabwe?

Economic think tank, Business Monitor International (BMI), has not ruled out that Econet Wireless Zimbabwe might decide to exit the market, especially as recent decisions by the regulator impact its profitability, BusinessDaily reported.

The think tank also believes that there is a strong possibility that a new international player could enter the Zimbabwean market through the acquisition of Telecel.

In its report dated 26 January 2018, BMI said the regulator's involvement in the mobile market has caused private operator Econet to express complaints over favouritism towards government-backed operators.

"Coupled with high taxes and other fees, we believe this has had a detrimental effect on competition and investment, eroding operators' margins and may cause Econet to exit the market," said the report.

The Postal and Telecommunications Regulatory Authority of Zimbabwe recently announced a review in legislation to allow operators to pay their licensing fees in instalments, after public operators NetOne and Telecel Zimbabwe struggled to make once-off payments. Of the three mobile operators, only Econet Wireless has paid the full $137.5 million fee set in 2013. Econet remains the dominant player with a market share of over 50%, and it distinguishes itself with superior network coverage, attractive VAS services and attractive on-net call tariffs.

BMI opine that the government taking over Telecel in 2016 reduced competition, although both Telecel and NetOne have embarked on an investment drive to catch up in terms of network coverage and quality.

BMI believes the POTRAZ is looking to provide an alternative to Econet's dominance by encouraging infrastructure sharing, of which Econet owns the majority.

A fourth mobile licence was issued to state-owned fixed telecoms operator TelOne in 2011, but it remains unutilised because of lack of resources to roll out services.

BMI concludes by saying, "The government's view of the telecoms sector as a revenue booster through taxation and ongoing tensions between Econet and the government over the regulator's perceived preferential treatment to state-owned operators pose important risks to growth and investment. While unlikely, we cannot rule out that Econet might decide to exit the market, especially as recent decisions by the regulator impact its profitability."