Networks Push For New Tariff Hike

MOBILE network providers are pushing for a new tariff increase barely a week after the National Incomes and Pricing Commission (NIPC) approved a 1 000% review on their charges.

Zimbabwe’s three mobile phone companies have since applied to the NIPC for a 2 900% increase that would push the tariffs from the current average of $4 million per minute to about $30 million per minute.

In the proposal the companies argue that this is the only rate that will allow them to remain viable.

Econet Wireless Holdings, NetOne and Telecel Zimbabwe executives said they made fresh applications to the Post and Telecommunications Authority of Zimbabwe (Potraz) and the National Incomes and Pricing Commission (NIPC) last week.

“We lodged another with Potraz. The issue of tariffs is an ongoing process with Potraz and NIPC,” said Econet chief executive Douglas Mboweni.

“In our view, tariffs should be no less than $30 million a minute if we are to survive.”

The current tariffs were derived from a Costing International Telecommunication Union  model used by all three providers to calculate tariffs for February.

The model, which was recommended by Potraz, takes into consideration operational costs incurred including cost of traffic, network expansion and the exchange rate.

It also includes labour, return on investment, debt servicing and other balance sheet items.

Mboweni said they had filed their application last week, while Telecel MD Rex Chibesa said they hade made their application two weeks ago. NetOne MD Reward Kangai said they submitted their last application at the end of March.

“The current tariffs are from an application originally made in February but the final official letter was sent on March 14 2008 after the initial discussions,” Chibesa said.

Tariffs were increased by more than 1000% last Friday. A single minute call now costs between $3,1 million and $4,5 million.

Network providers also accused NIPC for delaying the approval of reviews.

Both Econet and Telecel said they had last week settled for less than what they had applied for in February.

NetOne was the only mobile phone that was granted what it had applied for.

“The charges were as per our submission to NIPC through the regulatory body — Potraz,” said Kangai.

Mboweni said Zimbabwe still had the cheapest mobile and fixed network calls in the region.

“When people say our tariffs are now expensive, they are not being honest with themselves,” Mboweni said.

“This is not a tariff increase; it is a tariff adjustment in line with inflation. We are worlds apart from the tariff that we had in 1998 and what we have now.”

He said there was need for a feasible tariff base to deal with congestion on the networks and help them remain viable.

“Econet, being a private company, has opted to invest in other sectors to stay afloat. That is because the current tariff regime is insufficient to sustain the organisation,” Mboweni said.

Econet holds a 60% stake in Mutare Bottling Company, 22% in African First Renaissance Ltd and 12% in Kingdom Meikles Africa Ltd.

Econet has also suspended expanding its subscriber base temporarily with Mboweni saying the tariffs were not enough  for the company to increase subscribers from the current 650 000 to 800 000, the maximum number that their current equipment can carry.

“There has to be a correction in fundamentals affecting the telecommunications sector. We would like to expand more but we have to be supported by realistic tariffs,” he said.

Key projects that have suffered because of this include the marketing of Econet SIM cards in South Africa — a project that had been a cash-cow in foreign currency terms.

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