POTRAZ Halts Potential Price War
Econet Wireless , Zimbabwe's biggest mobile network operator (MNO) , and the country's telecoms regulator, POTRAZ, are in a battle of wills over the former's plan to cut mobile tariffs. Unsurprisingly, Econet's proposed tariff cut has generated strong support from consumer groups. However, BMI welcomes the regulator's intervention, which may have prevented a potentially damaging price war from breaking out in the mobile market.
On August 15 2013, Econet announced to its customers via a social media platform that it was slashing the cost of offnet mobile calls from US$0.25 a minute to US$0.10 a minute, a massive 60% drop. However, POTRAZ responded a few days later asking the operator to revert to its previous rate and desist from advertising the proposed tariff. The regulator based its opposition to the move on the principle that MNOs are not permitted to cut tariffs by more than 50% without regulatory approval. At the time of writing, Econet was faulting the regulator's move as an intrusion into operational matters.
It is uncertain how the face-off between Econet and POTRAZ over the proposed 60% cut in tariffs will end. Zimbabwe has one of the highest average mobile tariffs in Africa and a decrease is inevitable given the increasing competition and saturation of the mobile market. However, we opine that the process should be gradual to enable operators to adjust to lower prices. This would mainly take the form of improving cost efficiencies and finding new ways to boost non-voice revenues.
|Tariff Cut Is Inevitable|
|Average Prepaid Tariff Of Dominant Operators (US$/minute), August 2013|