The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) recently released its sector performance report for the third quarter of 2023. The report provides an overview of the key trends and developments in Zimbabwe’s postal and telecommunications sectors.

Decline In Overall Mobile Subscriptions and Internet Penetration

The report shows that the total number of active mobile subscriptions increased by 0.7% to 13,793,302 in Q3 2023, down from 13,955,937 in Q2. This led to a decline in the mobile mobile penetration to 91.9%, down from 92.6%. Also, the number of active internet and data subscriptions decreased by 0.2% to 10,102,613, resulting in internet penetration falling to 65.2% from 65.4% the previous quarter.

Increased Internet Usage But Declining Fixed Voice Traffic

Internet usage continued rising in Q3 2023, with total traffic up 11.6% to 42,058.3 Terabytes from 37690.4 Terabytes in Q2. Incoming international internet bandwidth capacity also grew by 8.3% to 318,742 Mbps. However, fixed voice traffic declined again, dropping 6.5% to 72.4 million minutes from 77.4 million minutes in Q2.

Strong Growth in Mobile Voice Traffic and Postal Volumes

In contrast to declining fixed voice traffic, mobile voice traffic increased by 0.2% to 2.53 billion minutes in Q2, up from 2.52 billion minutes in Q1 2023. Postal and courier volumes also saw strong growth of 2% to reach 536,986 items, up from 526,305 items in Q1.

Rising Revenues Across All Markets But Costs Grow Faster

The report highlights that while revenues grew in all markets, operating costs increased at a faster rate resulting in declining profitability. For example, internet access provider revenue grew 136.9% to $191.2 billion ZWL but costs were up 428.8%% to $224 billion ZWL.Mobile operator revenue increased 170.5% to $435.7 ZWL while costs were up 109.9%.

Key Challenges: High Inflation and Rising Costs

POTRAZ notes that high inflation continued exerting pressure across all sectors in Q3 2023. The significantly higher growth in costs compared to revenues meant most operators recorded losses for the quarter.

The report highlights that huge capital investment is required to upgrade networks and infrastructure. However, reduced revenue to cost ratios due to eroded tariffs and ongoing high inflation makes it difficult for operators to fund these investments.

Cautiously Optimistic Outlook Amid Policy Efforts to Curb Inflation

POTRAZ notes optimism for a potential recovery in Q4 2023 and into 2024. The government’s tighter fiscal and monetary policies towards the end of Q3 helped stabilize the exchange rate and reduce inflationary pressures. Operator revenues in real terms are expected to improve if inflation continues easing.

The report also highlights the added power generation capacity from Hwange Units 7 and 8 as a positive development that could enhance service quality and reduce backup power costs. However, policy interventions remain critical to create a more conducive operating environment for the sector.