The Telecommunications Operators Association of Zimbabwe (TOAZ) has urged Parliament to pass legislation that would permit companies in the telecommunications sector to peg their tariffs in US dollars. The move is aimed at mitigating the effects of the country’s rampant inflation on the telecoms industry. At the moment mobile network operators and internet service providers have to approach POTRAZ and the relevant authorities each time they want a price adjustment because of ZWL rate movements.
Lawrence Nkala, TOAZ’s chairperson, has requested that the legislators urgently review the pricing model of the sector. He argued that allowing companies to peg their tariffs in USD would ensure stability in pricing and increase transparency in their communication with customers. The proposal calls for prices to be determined in US dollars and converted to Zimbabwean dollars at the prevailing interbank rate each month.
The telecoms sector in Zimbabwe has been struggling with foreign currency shortages, low tariffs, and prolonged power outages, which have severely impacted coverage, access, and service quality. The country’s telecoms regulator, the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), increased tariffs by 50% last month. The regulator has also already given mobile network operators and ISPs the permission to raise tariffs by another 50% in April.
The proposal has been met with mixed reactions from experts in the industry. Some believe that pegging tariffs in US dollars would provide much-needed stability to the sector, which has been plagued by price instability and currency fluctuations. However, others argue that the move would result in further alienation of the low-income population, who are already struggling to keep up with the high cost of living.
Despite the concerns, the proposal has gained traction among telecom operators who are looking for ways to navigate Zimbabwe’s economic challenges. The country has been experiencing hyperinflation since 2018, which has resulted in a significant devaluation of the Zimbabwean dollar. As a result, many businesses, including telecom companies, have been struggling to maintain their operations.
The proposal to peg telecoms tariffs in US dollars is a potential solution to the sector’s pricing challenges. However, it remains to be seen whether the legislation will be passed, and if it does, how it will be implemented. Nonetheless, it is clear that the telecoms industry in Zimbabwe needs urgent intervention to address the multiple challenges that it faces. It is also important to point out that there is already a pilot project where each operator has been partially allowed to charge for certain bundles exclusively in USD. For example, Econet has it’s Smart Bundles, TelOne has it’s USD bonus bundles and Liquid has Speed bundles.
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