Econet slams government control of tariffs

Econet slams government control of tariffs

JOHANNESBURG:
INTERNATIONAL cellular phone network operator, Econet International has slammed the Zimbabwean government's stranglehold on the control of tariffs, a development which the company bemoans has made trading is killing profitability of the industry in the economic crisis-plagued country.


Econet spokesperson, Sure Kamhunga, said the fact that the government controlled the tariffs using the uneconomical official exchange rate had left Zimbabwe with the cheapest and most uncompetitively priced tariffs in the world which, coupled with a dire shortage of foreign currency, was scuttling its operations.
Econet, under the operation name Econet Wireless, is the biggest player in the cellular network industry in Zimbabwe.
“There are currently two problems in Zimbabwe. Firstly there is no foreign currency in the country to buy new equipment to extend capacity. The government of Zimbabwe controls the tariffs, and they make any adjustment using the official exchange rate.
 “As a result, tariffs in Zimbabwe are very low. For instance it costs US$ 0.002 per minute to make a local call in Zimbabwe , using the parallel market rate, the only rate at which currency is available, compared to US$0.42 per minute in South Africa,” said Kamhunga.  
 This has forced the company to export very small amounts of lines to international dealers because it desperately needs foreign currency, which the current tariff regime was jeorpadising, to buy urgently needed spares, he said.
Kamhunga added that because of the Zimbabwean government’s control of the tariffs, the expansion of the industry in tat country was moving at a snail’s pace.
“The availability of cell phone lines or SIM cards is dependent on the capacity on the network itself. In order to make this capacity available a network operator like Econet has to invest millions of dollars purchasing equipment to build base stations all over the country.
“Although the investment is very high, an operator hopes to recover the money invested, and then also make profits after a number of years from customer usage. The tariffs in Zimbabwe are not only the lowest in the world, but it is also impossible to recover the investment made to provide a line in the life of the cellular licence. This has resulted in a situation whereby all the networks in Zimbabwe are unable to deliver new lines to customers in need,” he said.
Econet together with NetOne and Telecel are there three cellular phone network operators in Zimbabwe-CAJ News

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