Allow foreign ownership of local telecommunications- WB tells Zim

Zimbabwe should let telecom operators charge economic tariffs to allow them to invest, the World Bank says.

In a new report on Zimbabwe’s private sector, the World Bank says digital connectivity is one of the main issues holding back economic growth.

Investment in the sector has been low because existing operators are compelled to charge sub-economic tariffs while regulations also shut out the entry of new smaller players.

“The inability of telecom operators to peg their price on a stable currency or pass on hyperinflation limits their incentives to invest,” the World Bank says.

The bank urges government to “introduce a flexible approach to price regulation by allowing telecom operators to pass on inflation within a predefined range.”

Industry regulator POTRAZ sets tariffs using the Telecommunication Price Index (TPI), a model that tracks the costs telcos face in providing service. The costs include bandwidth, fuel, network maintenance and staff costs.

Between January and June last year, that index rose by 528%, but POTRAZ approved only a 100% tariff increase in October. In its last financial report for the August half-year, Econet, the country’s biggest operator, said tariff adjustments were lagging inflation.

Econet said: “Regular and effective tariff reviews that track inflation and exchange rate movements are critical to ensure the viability and sustainability of the sector.

“According to the Postal, Regulatory Telecommunications Authority of Zimbabwe (POTRAZ) voice and data tariffs remain at discounts of 58% and 88% respectively to the region.”

The World Bank says licence fees are too high to allow new players. The bank urges authorities to “facilitate frequency spectrum acquisition by smaller operators through asymmetric license fees or by using a progressive rate”.

Government, it says, must also allow more foreign investor ownership of local telcos and support the entry of companies that specialise in running telecoms infrastructure on behalf of mobile operators.

NewZwire