via Econet to approach Court over tariffs 31/12/2014
A POTRACTED legal battle is brewing between Econet Wireless Zimbabwe and the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) over its directive to slash voice tariffs from 23 cents to 15 cents starting January 1, 2015.
Already, Net-One and Telecel have moved to comply with the directive issued in October as part of its agreed Long Run Incremental Cost (LRIC) model crafted by Potraz.
According to a source, Econet Wireless Zimbabwe is unwilling to comply with the policy directive and has preferred to mount a legal challenge to the decision.
Although officials from Econet were not responding to questions sent regarding the matter, a top source at Potraz said the country’s largest mobile company in terms of subscription and infrastructure, is reluctant to comply saying the move is aimed at “pulling them down”.
“Econet views the move as a target at them as the two other companies have not invested much to improve their services,” said a Potraz source.
Initially, Econet took the directive to the courts but the High Court rejected their application, and according to a Potraz official, the firm is not resting and is now taking the matter to the Supreme Court so as to stop the slashing of the voice tariffs.
“As you know Econet has already taken the legal route, it wants to fight up to the last court of appeal available. But they might lose out on customers if they fail to comprehend the issues at stake,” the source said.
The move to cut call tariffs takes into consideration savings on network infrastructure investment that the operators are set to gain from a new infrastructure sharing strategy.
In August this year, the largest mobile phone operator, said it will not engage in a tariff war with rivals, as the move would give the impression that the company was underperforming.
The group chief executive Douglas Mboweni told shareholders at the company’s annual general meeting that Econet would invest more into broadband over the next year to counter the continuing fall in revenues from voice services.
“Much of the competition has focused on price slashes. While we will continue to offer competitive promotions, we will not go into an all-out price war with the competition. We believe this is not sustainable,” Mboweni said then.
The economic environment was increasingly tough with voice revenues declining the world over, including in Zimbabwe.
According to Telecel and Net-One, the new tariffs are being introduced as part of the agreed Long Run Incremental Cost (LRIC) model that POTRAZ crafted after consultation and comparison with other countries.
Despite government imposing a five percent excise duty on airtime with effect from September 1, 2014, Potraz said mobile network operators should not increase tariffs above approved levels as the excise duty was to be recovered from the current chargeable rates.
The 23 cents per minute tariffs have essentially been the same since about 2009.
COMMENTS
Why is the cost of phoning so expensive in Zimbabwe? US$0.23 per minute for a local call?
Because Zimbabwe’s official God is the US dollar for all Zimbabweans.
The last time there was a report that Potraz had denied Econet to reduce tariffs. the reporters should bring this out.
Econet claims it now has a subscriber base of over 8million from an initial figure of less than a million. So surely economies of scale should apply.
the tariffs truly are very high. we are spending most of our time texting/whatspp because the current tariffs unaffordable.
Econet = 23 cents / minute
South Africa = ± 10 cents per minute
UK / USA = about 8 cents /minute.
Can you remember when Econet used to charge us $120- for 1 GB data?
Econet has a monopoly and it uses it to squeeze its customers in Zimbabwe.
That is why when you say: How are you to Econet staff, they reply: I am blessed.
Indeed —
Well if Econet wants to charge $1.00 per call its up to them, I suggest those who cannot afford it can then join the other service providers. It is my belief that Econet has invested heavily in infrastructure while the competitors have not so they should be able to recoup their investment. I was under the impression that this was free market. Comparing charges with SA, UK etc is irrelevant, as everything in Zimbabwe costs more do you think those houses going for those prices are comparable, do you think the price of bread, transport etc is in line with other countries No. Those who cannot fly to Kariba drive or catch ‘chicken bus’ those who cannot afford Econet should just go to the competitors. The competitors tried to lower prices but people stuck with Econet and zvarwadza macompetitors.
It is in fact quite relevant to compare prices in different countries and markets, in the context of other factors and considerations. You must remember it’s now a global village that we live in and one should not be afraid of such comparisons. In my view it is bad corporate governance and unethical business practice to invest so heavily that you stifle the competition with the main objective of holding the customers hostage. It is unscrupulous for Econet to seek to recoup all their investment overnight.
Tendai should be well aware that even in the very free markets (eg EU, USA, etc) they have monopolies and fair- trade commissions to guard against corporate abuses and profiteering such as cited in the article above.
Very expensive tarrifs and very poor service delivery ordinary people should boycott Econet find another service provider
its a free market when anyone is allowed to get a telecom licence.if licences are given to a few entities there must be checks and balances and thats why the government is getting involved.communication is now a need baba dont let econet bully us.imagine if they giveout the same licences to Mtn and Vodacom, inovhara ecobet.
We must be in line with world trends.10 cents a minute I think.
@Petal you are right and you seem to care about the masses as opposed to @tendai who supports the corrupt system of very high profits ranging from 200-300% instead of the 20-30% normally charged internationally.These guys do not care about their poor countrymen as long as they get fat salaries.
As far as I know telecomms business,the equipment is supposed to pay for itself within about five years if it is installed and commissioned properly because during that period the equipment is new and needs no maintenance except teething installation minor faults.You can really lock the doors to it and just check the standby power units like generators and backup batteries.Therefore,increases on tariffs using expansion as a reason is stupid and shortsighted to justify quick profits in the shortest time.This is simple robbery which POTRAZ is trying to control.
Now that the fixed network is providing more stable internet system,these mobile companies will soon experience real financial problems as their customer base shrinks.Zimbabwe business people should learn to be patient to make profits over the years not by asking for 200-300% profits.I really hope other control bodies should act like POTRAZ soon to control these too high profits.