Telecommunication Operators Get Approval to Charge in Forex

Friday, Jan 02, 2009

Telecommunication operators have been granted regulatoryapproval to charge for all their products and services in foreign currency.Industry players said companies in the telecommunications sector had sought theapproval in order to stay afloat, as service providers had to run operationsfunded almost entirely in foreign currency while still earning local currency.

Econet Wireless, the country's largest mobile serviceprovider, will today start charging all services and products, includingairtime and SIM cards, in foreign currency.

Econet said 95 percent of the cost of bringing service toits customers was in foreign currency.However, because of tariffs charged inlocal currency, the company, as is the case with other telecom operators, wasincreasingly unable to invest in the maintenance of its infrastructure or tomeet other costs critical to the efficient running of the network. Econet'score cellular business reported a loss in the year to August, the company's firstever loss since it commenced operations 11 years ago.

""We are grateful that our regulators recognisedthat this decision had to be taken to save companies in the telecommunicationsindustry,"" said Econet Wireless chief executive Mr Douglas Mboweni,who is also head of the Telecommunications Operators of Zimbabwe.

Buddie subscribers will be charged US$0,29 per minute for acall within the Econet network, and US$0,32 for calls to other networks.MrMboweni said the tariffs were exclusive of value added tax, which, at 22,5percent, was ""well above the regional average"" of 14percent. Zimbabwean operators also face unique costs, such as providing back-updiesel power to base stations and other key installations because of frequentpower cuts.

An immediate result of the authorization to bill in foreign currency has been to enable Eco net to open negotiations with billing systems suppliers, which would lead to the restoration of post-paid packages, said Mr Mboweni.Contract subscribers were migrated to pre-paid in November pending the availability of new funding to invest in a new billing system.