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Telecommunications companies in Zimbabwe are adjusting their tariffs to offset rising operational expenses caused by currency devaluation and inflation. Industry experts have pointed out that the increases are essential for maintaining service quality and financial stability. “With soaring inflation and currency depreciation driving up operational costs, the price hikes were inevitable,” noted an insider.
In September 2024, Zimbabwe devalued its gold-backed currency by 43% and raised interest rates to address ongoing economic challenges. This devaluation has severely impacted sectors like telecommunications, which rely heavily on imported equipment and software, resulting in steep cost increases.
The telecom sector in Zimbabwe has faced long-standing difficulties, including shortages of foreign currency, frequent power outages, and persistent inflation. The depreciation of the Zimbabwean dollar (ZWG) has further compounded these issues, making it more difficult for telecom operators to invest in new technologies and maintain service quality.
While the tariff adjustments will mean higher costs for consumers, telecom operators argue that the price increases are necessary to continue delivering reliable services amid mounting operational pressures. In 2023, telcos petitioned the government to allow them to peg their tariffs in U.S. dollars to shield themselves from hyperinflation. Although the telecommunications regulator, POTRAZ, approved a 50% increase in local currency prices, the continuous depreciation of the ZWG has prevented operators from fully covering their costs.
In September 2024, the local telecom industry experienced some growth as Starlink, Elon Musk’s satellite internet service, officially launched in Zimbabwe. Starlink’s entry into the market has heightened competition, as users can now directly access internet services from its platform.
At the same time, Zimbabwe’s telecommunications companies face new regulatory pressures. Under revised regulations, telcos could face fines of up to $5,000 for providing poor-quality service. The Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) aims to enforce service standards, targeting issues like dropped calls, slow internet, and delayed message delivery to protect consumers.
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