Zimbabwe telcos under pressure as economy slows

Zimbabwe’s deflated economy is impacting on the country’s telecommunications industry and has forced operators to leverage promotions to reduce service tariffs.

The local economy is battling severe cash shortages and resulted in a daily limit on withdrawals of approximately US$200.

The government is drumming up usage of plastic money and mobile money to help ease the cash crunch. It will also introduce bond notes (local currency backed by a $200 million Afreximbank facility) in October as a way of incentivising exporters and dealing with the cash shortages.

While the internet has emerged as a ‘cash cow’ for mobile companies amid declining voice revenues, executives are reviewing their promotions to reduce mobile and mobile internet charges – but are equally adamant that the approach must generate profit.

Douglas Mboweni, chief executive officer of Econet Wireless, said “Any promotion should give value to customers and also make business sense.”

Econet Wireless has since revamped its data bundle offerings, expanding the periods of validity. There are now options for weekly and monthly options for its 7X promotion that gives subscribers seven times more worth of value of voice minutes and data used.

Telecel Zimbabwe is also running promotions that give 100% bonus value on airtime top ups. On Friday it announced that it was reducing tariffs for its mobile money platform, Telecash.

“Our decision to lower Telecash tariffs is in response to the need to encourage and make more affordable the use of electronic and plastic money in line with government’s efforts to ease the current cash crisis,” said Violet Masunda, Telecel’s acting head of mobile financial services.

Under the new tariff regime, Telecash has brought down the Telecash Gold debit card charges from a maximum of US$2.95 down to only US$0.45, while transactions of less than US$2 are now free.

Bill payments have also been reduced from a maximum of US$3.70 down to US$1.50 with bill payments of under US$5 being free of charge. Telecash competes in the Zimbabwean mobile money sector against Econet’s EcoCash as well as the OneWallet platform run by NetOne