POTRAZ orders mobile phone companies to cut tariffs

The Postal and Regulatory Authority of Zimbabwe (POTRAZ) has ordered mobile network operators to cut their voice tariffs to 15 cents per minute from the current maximum of 23 cents per minute with effect from December after adopting a new pricing model, in a move that will exert pressure on a sector battling rising costs.

In a circular to the industry dated October 16, POTRAZ said it would, for now, leave data charges to be determined by market forces.

The directive, which will eat into the revenues of an industry that has become a government cash cow, comes just a month after Finance Minister Patrick Chinamasa imposed a five percent excise duty on all airtime sales.

The industry is struggling to contain costs, mostly driven by back-up power supplies in the face of rolling electricity outages.

POTRAZ said it has abandoned the COSITU pricing framework – an International Telecommunications Union’s model for the determination of costs and tariffs (including interconnection and accounting rates) for telephone services — in favour of a long run incremental cost (LRIC) model, which will see tariffs progressively coming down in response to what it said was “a public outcry” by consumers.

“The COSITU model that was used from 2004-2009 was designed for circuit switched circuits has since been rendered obsolete due to technological and market developments in terms of newer services that are packet-based across the board,” POTRAZ said in a circular to mobile operators.

“After due consideration of the concerns raised by the consumers on tariffs being charged by operators, and representations made by operators on the same issue, the Regulator adopted a new costing model which is based on the long-run incremental cost methodology (LRIC).”

The tariff will be further adjusted to 12 cents per minute in 2015 and nine cents per minute in 2016. The interconnect rate will come down from the current seven cents to five cents in December 2014, four cents in 2015 and ultimately three cents by 2016, the sources said.

POTRAZ officials were not immediately available to comment.

Latest statistics on the regulator’s site shows that mobile operators generated $250 million in revenue in the final quarter of 2013, with only market leader Econet increasing its share of the revenue cake, while the other two players – Telecel and NetOne — saw two percent and one percent declines in their share of revenue, compared with the previous quarter’s figures.

At the end of December 2013, there was a total of 2 069 staff employed in the mobile sector, according to POTRAZ data.- The Source

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