Over the past few years, the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) has warned that operating costs in the telecoms sector were rising faster than revenues.
For example, a 2024 Potraz annual sector performance report raised the alarm bells once again by highlighted that escalating costs, which surged by 42,83% in 2024, were threatening the profitability and long-term growth of the sector in which, by comparison, revenues only grew by a modest 14,83% in the same period.
The alarm comes at a time when demand for data services in particular has been soaring at an exponential rate. Potraz’s 2024 annual sector performance report spotlighted eye-opening data to show this.
The report revealed that mobile internet and data traffic nearly doubled, growing by 75.09% in just one year. It rose to 299.77 petabytes (PB) in 2024, up from 171.21 PB in 2023. A petabyte is 1 million gigabytes (GB).
Only 10 years ago, in 2014, the country consumed just 1.7 PB of data. Now, national data consumption has exploded by more than 17,000%.
The surge in data consumption reflects the central role that data plays in business, commerce, education, entertainment, health and so many other aspects of daily life.
It also raises the tough question: Who pays for this digital boom?
Telecom operators such as Econet, NetOne, TelOne and Telecel must build and maintain vast infrastructure – from base stations and fibre networks that connect users to international bandwidth, to robust power and energy systems, along with billing and rating engines to get the data to the end users, and to keep Zimbabwe connected.
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The investments are capital-intensive, largely requiring foreign currency, and must be recouped in an economy where revenues are earned in both foreign and local currency.
Simply put, operators cannot provide services at below-cost. This explains why the industry regulator Potraz has been sounding the alarm. Without cost-reflective models, margins collapse, reinvestment stalls and expansion into underserved communities becomes impossible.
This reality recently came into sharp focus when Econet started enforcing a Fair Usage Policy (FUP) on its popular SmartBiz packages.
Although fewer than 2% of its estimated 100 000 subscribers raised the complaints, the debate around “unlimited” data usage well and truly took centre stage. Yet the truth is that no company or service provider can sustainably provide unlimited resources at below cost, especially when excessive consumption by a few then undermines service quality for the majority.
Industry experts say on average, households and small businesses rarely exceed 800 GB of data in normal monthly use. They contend that consumption beyond this threshold by households often signals usage activities outside typical needs, including the reselling of data, which puts them in a different service class to that for which the product was intended.
In cases of heavy usage, it is fair and commercially logical that such users contribute more to the costs associated with the delivery of the service. Cost-reflective pricing ensures they get the value they need, while ordinary consumers continue to enjoy reliable service at comparatively lower prices, without being forced to subsidise the heavy users.
While the telecoms and ICT sectors are considered the backbone of the country’s digital economy – driving digital transformation and powering fintech, e-commerce, e-learning and telemedicine – the backbone is only as strong as the financial health of the companies that sustain and carry it.
If products are priced incorrectly or unrealistically, network infrastructure strains, service quality drops, and investment dries up.
Global practice supports this view. Operators around the world – including in South Africa, East and West Africa and the United Kingdom – already segment their data packages in line with typical usage patterns for the individual consumer, home office / small office, corporate and large enterprise users.
They set Fair Usage Policies at agreed thresholds for different user categories, and they allow those users the opportunity to migrate upwards by paying more, if they want to use more data.
Zimbabwe cannot afford to be an exception to this trend.
With data usage having leapt from 1.7PB to 299.77PB in ten years, and with the sector watchdog having repeatedly raised the alarm about costs growing faster than revenues, it is surely time that the conversation shifted from “cheap” or “free” data, to sustainable and cost-effective data pricing.
Safeguarding the survival of the sector and ensuring that the excessive consumption of data by a few does not prejudice the majority, requires all stakeholders – regulators, operators and consumers – to have a meeting of minds, and accept that non-cost reflective pricing is neither realistic nor desirable.
Cost-reflective models are the only way to ensure that Zimbabwe’s telecoms industry will continue to grow, innovate, reinvest and meet the exponential growth in demand for data service and a truly digital society.
