Mobile network operators in Zimbabwe are significant drivers of digital transformation but have been hit really hard despite increased revenue
By Angela Collings
According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) annual sector performance report for 2020, the operating costs of Mobile Network Operators (MNO’s) during the period increased to $11.7 billion, from $2.11 billion the previous year. This is attributed to the rising cost of doing business in Zimbabwe due to inflationary pressures.
To curb these pressures, POTRAZ gave MNO’s the go-ahead to hike data, SMS, and voice tariffs by almost 200%. The regulator said that this increase is justifiable because it is a good way of maintaining a balance between service affordability and the viability of mobile network operators.
The September 2020 price adjustment came after a Buddcomm Intelligence Report revealed that hyper-inflation was eroding revenue of telecom companies, and was aimed at ensuring the three MNO’s (Wireless, NetOne and Telecel) continue to invest in network upgrades, partly supported by government efforts and cash released from the Universal Service Fund.
The report highlighted that the impact of the Covid-19 pandemic and the crucial nature of telecom services, both for general communication as well as a tool for working from home, will offset these pressures. This was seen in the over 700 percent ($26.3 billion) increase in MNO revenue for 2020. This was undoubtedly driven by the pandemic which saw a surge in demand for communication services, data volumes in particular, as consumers adapt to the new normal.
This year POTRAZ urged MNO’s to continue its efforts in increasing access to data services by investing in data infrastructure to fast-track the country’s digital transformation journey. The regulator also aims to increase competition in the data service market to make mobile and internet services accessible to everyone.
POTRAZ director-general, Gift Machengete explains that measures such as allocation of additional 3G infrastructure, development of the National Broadband Plan currently being circulated to stakeholders, and infrastructure sharing initiatives, are all meant to ensure affordability.
He said the regulator will continue to monitor data tariffs and is working on increasing competition in the market to ensure all Zimbabweans have better access to affordable mobile and data services.
This is one of the reasons the recently published Telecommunications Monitoring System and Revenue Assurance (TTMS) regulations are important. It facilitates the implementation of a cutting-edge technology-based system that will effectively monitor telecom traffic, providing real-time accurate data collection. This gives POTRAZ better visibility of market dynamics which is essential if it is to create a more competitive market.
Historically, telecom regulators in Africa have relied on a self-declaratory regime. However, the information and statements provided by MNO’s has the potential to be biased and possibly incomplete, failing to provide accurate and comprehensive data.
This impacts the regulator’s oversight ability, creating a gap between regulations and the way operators comply with them. Which has been witnessed over the last few years with several telco regulators in Africa imposing hefty penalties on operators, leading to lengthy court battles with little resolution.
Another issue in countries that lack sufficient visibility of the telecom sector is grey markets tend to grow rapidly. In the case of mobile devices, these illegal markets are driven by parallel import and distribution channels for irregular activities carried out by companies with no connection whatsoever with the official producers and providers.
Each year, billions of dollars in fees and taxes across the world is lost due to the illegal termination of international calls that bypass the international gateways of licensed operators. These illegal international calls are fraudulently terminated as local calls, using SIM boxes, PBX, and Internet-based methods. Telco’s try to cope with this grey telephony issue individually, some with more success than others, but with limited results overall.
The Sub-Saharan mobile markets are among the most affected globally by fraud. Since 2010, for example, Ghana has lost more than $100 million as a result of fraudulent SIM boxes. According to the Nigerian Regulator (NCC), Nigeria is losing around $60 million each year due to SIM boxing, call masking and refilling.
The consensus among experts is that the fast-paced development of mobile technology has contributed to the increase in bypass fraud. This is because SIM boxes can now be programmed to replicate user behaviour; one SIM box can operate with many gateways located in different regions and this definitely favours a faster escalation of fraud.
In addition, identity theft through SIM swap threatens consumer’s trust in the mobile operators.
The TTMS is a highly advanced regulatory tool, putting POTRAZ in a better position to increase revenue assurance, combat network fraud and enforce billing integrity across all communication networks available in the country.
This capability is a far cry from the current reporting system which leaves the door open to potential fraud and deprives MNO’s and governments of substantial revenue. Zimbabwe’s TTMS capability is an important step in ensuring MNO’s remain a significant driver of digital transformation, with mobile and data services at the forefront.