Econet to approach Court over tariffs

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.

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