Mobile network operators became the latest sector to increase prices for their products with an upward adjustment of tariffs for broadband services following the floating of the country’s local currency against the United States dollar.
Zimbabwe liberalised its exchange rate on February 22 when it introduced an interbank market for foreign currency trading.
The new exchange rate, which had a start rate of RTGS$2.5 to US$1 but is now trading at a rate of 3,2 to 1, effectively means the local RTGS dollar has lost significant value from the long-pegged 1:1 rate.
It also means importers now have to fork out more to be able to continue to pay for foreign supplies.
The mobile telephone industry is one of the most affected as the bulk of its hardware and software has to be imported.
The cost of rolling out the network equipment is priced in dollars and given the new exchange rate, businesses can only remain viable by reasonably adjusting prices or tariffs.
Further, the bulk of the network equipment and systems need constant upgrading and servicing and all this requires a significant degree from foreign suppliers.
Resultantly, any change in the exchange rate will be strongly felt by players in the telecoms sector, making price adjustment a necessity if they are to continue to provide reliable services.
NetOne was the first one to announce changes in its data bundles with the OneFusion data bundle now offering approximately 83% less.
For the same RTGS$10 subscribers can now only get 180MB down from the previous 1.1GB.
Netone CEO Lazarus Muchenje reportedly defended the changes, saying they were necessitated by the declining value of the local currency.
He said the cost of doing business had gone up and was no longer sustainable at old tariffs.
“The cost of doing business in Zimbabwe has risen sharply over the recent past, hence for us to continue providing quality products and services, we needed to adjust our packages as a commercial enterprise,” said Muchenje.
“This is not only unique to us as you shall see other industry players following suit,” he added.
Telecel has since announced new packages showing a reduction in the quantity of data offered at the old tariffs.
Econet is likely to come through with its own tariffs soon and has already started showcasing, on its Facebook page, new data packages which are likely to come with a change in tariffs.
The cost of doing business in Zimbabwe has been on an upward trajectory as some business resort to the parallel market for foreign currency.