- The number of active mobile subscriptions declined by 1.7 per cent to reach 14,051,251, from 14,300,790 recorded in the fourth quarter of 2022.
- The total number of active Internet and data subscriptions increased by 0.1 per cent to 9,920,847 from 9,914,950 recorded in the fourth quarter of 2022.
- Internet penetration increased by 0.1 per cent to 65.4 per cent, from 65.3 per cent recorded in the previous quarter.
A Shift in Zimbabwe’s communication trends
The first quarter of 2023 witnessed a significant shift in communication trends in Zimbabwe’s telecommunication market. Voice traffic experienced a sharp decline while mobile internet and data traffic continued to surge. According to the quarterly bulletin released by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), the country’s mobile internet and data traffic witnessed a 12.3 per cent increase. It reached 37,690.4 Terabytes by the end of Q1 2023, compared to 33,576.4 in the previous quarter.
The report also revealed that Econet’s market share in the Internet and data sector decreased by 7.2 per cent. NetOne gained while struggling with Telecel’s market share remained unchanged. This shift highlights the growing reliance on smartphones for various online activities. These activities include social media engagement, e-commerce transactions, and online learning.
In stark contrast to the surge in mobile internet and data traffic, voice traffic experienced a significant decline. Voice traffic dropped from 3 billion minutes in Q4 2022 to 2.5 billion in Q1 2023. This represents a 16 per cent decline. The report suggests that the voice traffic decline came from the rising popularity of Over-the-top (OTT) VoIP services. These include WhatsApp, Telegram, and Facebook calls.
The voice traffic decline aligned with the downward trend in Net-on-Net traffic in the first quarter of 2023. POTRAZ noted that the decline in fixed and mobile voice traffic could have been partially attributed to the 50 per cent increase in tariffs implemented in February 2023. Additionally, the deteriorating quality of service due to frequent power outages and resulting lower call-success ratios also played a significant role in the shift towards VoIP alternatives.
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Zimbabwe’s telecommunication market share
Regarding Zimbabwe’s telecommunication market share, Econet and Telecel witnessed a 2.6 per cent and 0.2 per cent decline in voice traffic, respectively. NetOne experienced a 2.8 per cent increase. This indicates a changing landscape in the telecommunications industry, with traditional voice services losing ground to VoIP solutions.
Eighty-six new base stations were deployed in the first quarter of 2023. Contrastively, only 175 base stations were deployed in the fourth quarter of 2022. LTE has the highest number of deployments, followed by 3G. This shows that the investment thrust of mobile network operators is in broadband networks. According to the report, currently, Econet is the only mobile network operator with 5G infrastructure, hence the 100 per cent market share. Telecel is lagging in deploying Next Generation Networks, with only a 1 per cent market share of LTE deployments.
Furthermore, the report highlighted that the total number of active Internet and data subscriptions increased by 0.1 per cent to 9,920,847 from 9,914,950 recorded in the fourth quarter of 2022. The Internet penetration rate increased by 0.1 per cent to 65.4 per cent, from 65.3 per cent recorded in the previous quarter.
Despite declining voice traffic, total mobile operator revenues witnessed a substantial increase. A 34.8 per cent growth translated to $161.1 billion from $119.5 billion in the previous quarter. However, operating costs also rose by 25.7 per cent to $102.8 billion. The rise reflects the challenges operators face in adapting to the changing landscape.
Furthermore, the first quarter of 2023 revealed several other noteworthy trends in Zimbabwe’s telecommunications market. The number of active fixed telephone lines experienced a slight increase of 0.3 per cent. Consequently, it reached 292,253 in Q1 2023 compared to 291,324 in Q4 2022. This resulted in a marginal rise in fixed tele density, reaching 1.93 the previous 1.92 per cent.
Zimbabwe’s telecommunication market revenue
On a positive note, the total revenue generated by the postal and courier sector showed an increase of 23.4 per cent, recording $15.86 million in the first quarter of 2023, compared to $12.88 million in the fourth quarter of 2022. However, operating costs in this sector also rose by 28 per cent reaching $15.20 billion, highlighting the challenges faced by the industry.
The report further revealed that PSTN fixed voice traffic experienced a 5 per cent decline, recording 77.4 million minutes in Q1 2023 compared to 81.5 million minutes in Q4 2022. This downward trend aligns with the overall decline in voice traffic, as more users opt for VoIP services over traditional fixed-line voice calls.
Additionally, incoming international internet bandwidth capacity witnessed an 8 per cent increase, reaching 294,201 Mbps in the first quarter of 2023 from 272,430 Mbps in the previous quarter. This growth indicates a higher demand for international internet connectivity, possibly driven by increased online activities and cross-border communications.
Regarding financial performance, total mobile operator revenues exhibited a notable growth rate of 34.8 per cent, amounting to $445 million in the first quarter of 2023, compared to $330 million in the previous quarter. However, mobile operators’ operating costs increased by 25.7 per cent, reaching $284 million from $225.7 million in Q4 2022. This highlights the challenges operators face in maintaining profitability amid changing market dynamics.
Moreover, Internet Access Provider (IAP) revenues experienced a substantial growth of 46.8 per cent totalling $223 million in the first quarter of 2023 compared to $152 million in the previous quarter. However, operating costs for IAPs grew by 54.4 per cent to reach $117.2 million, reflecting the increased expenditure required to support the rising demand for internet services.
Overall, the first quarter of 2023 in Zimbabwe’s telecommunications market showcased a clear shift towards mobile internet and data usage, accompanied by a decline in traditional voice services. The rise of VoIP calls and OTT messaging platforms has significantly impacted voice traffic, necessitating operators to adapt their strategies and invest in improving service quality. As the country’s internet penetration rate continues to inch upward, the telecommunications industry must continue to innovate and meet the evolving needs of consumers in an increasingly digital landscape.
Inflationary Environment and Unavailability of Credit
Zimbabwe’s telecommunication market operates within the larger economic landscape, making it susceptible to the effects of inflation. According to POTRAZ, rising prices erode consumer purchasing power, reducing demand for the sector’s services and products. Additionally, the unavailability of credit restricts the ability of Zimbabwe’s telecommunication sector to invest in infrastructure upgrades, technological advancements, and service improvements. This hampers its competitiveness and ability to keep up with evolving customer demands.
Reduced Consumer Spending and Inadequate Foreign Currency
During times of economic downturn, consumers tend to tighten their budgets, resulting in reduced spending on non-essential services. This reduction in consumer spending directly impacts the revenue generation of the postal and telecommunication industry. Moreover, inadequate foreign currency reserves limit Zimbabwe’s telecommunication sector’s ability to import crucial equipment, software, and bandwidth necessary for maintaining and expanding its networks. According to the report, this currency shortage hinders technological progress, leading to a potential decline in service quality and innovation.
Prolonged Load-Shedding and Service Quality
Load-shedding has become a persistent challenge in Zimbabwe. Extended periods without electricity disrupt service provision, impairing communication networks and hindering the delivery of postal services. Consequently, customers may experience frequent disruptions, delays, and reduced quality of service. According to POTRAZ, these issues can harm customer satisfaction. This can affect the reputation and the market competitiveness of Zimbabwe’s telecommunication sector reputation and
Addressing the Challenges and Seizing Opportunities
Prioritizing Government Expenditure and Resource Mobilization
According to POTRAZ, the government of Zimbabwe must prioritize its development through strategic allocation of resources and sustained investment. The government’s support will help infrastructure development, modernize networks, and enhance service quality by allocating sufficient funds. It will also overcome the challenges faced by the postal and telecommunication sector. This will increase customer satisfaction, consumer spending, and economic growth.
Foreign Currency Allocation and Network Expansion
POTRAZ acknowledges that Zimbabwe’s telecommunication sector relies heavily on imports. Thus, the government of Zimbabwe should prioritize foreign currency allocation to ensure a steady supply of equipment, software, and bandwidth. Adequate foreign currency reserves will facilitate network expansion, maintenance, and technological advancements, fostering a conducive environment for innovation and growth. Investing in modern infrastructure and technologies can meet evolving consumer needs. It can also drive digital transformation and boost the competitive edge of Zimbabwe’s telecommunication market.
Converged Licensing Framework and Competition
Implementing a converged licensing framework can create opportunities for the postal and telecommunication sector. This framework encourages competition by allowing more players to enter the market, fostering innovation, and expanding consumer service options. The increased availability of Mobile Virtual Network licenses, for instance, promotes competition and offers consumers a wider range of choices. Furthermore, introducing advanced communication technologies such as LTE, Fibre, and satellite services enables the delivery of high-quality communication and internet services, ensuring enhanced service flexibility for consumers.
Digital Transformation and Efficient Business Models
Digital transformation presents significant opportunities for postal and courier operators to improve service delivery and adopt more efficient business models. Operators should leverage emerging technologies like automation, artificial intelligence, and data analytics. Thus, they can streamline operations, reduce costs, and enhance customer experiences. Moreover, operators can implement efficient logistics systems, optimise delivery routes, and embrace e-commerce integration. This way, they can adapt to changing market dynamics and take the lead in digital landscape evolution.
Addressing Data Privacy and Security
While the widespread adoption of broadband and digital technologies brings numerous benefits, it also introduces new security concerns and challenges. Data privacy and security have become critical issues in today’s interconnected world. Consumers are increasingly concerned about the unauthorized use of their sensitive data. Regulatory measures must be implemented to address these concerns and foster digital safety and confidence. According to POTRAZ, establishing a Data Protection Authority in Zimbabwe is vital. It will ensure adequate data protection and enforce regulations related to data privacy. The Cyber and Data Protection Act could promote data privacy and a secure digital environment, instilling consumer trust.
