Forex Shortages Choke Econet Operations

Telecommunications giant, Econet Wireless Zimbabwe says the shortage of foreign currency on the market has adversely affected its capacity to service its network foreign suppliers as well as implement much needed network maintenance and expansion.

The situation has been worsened by the persistent power cuts that have necessitated the need for more foreign currency to invest into alternative energy sources such as solar.

In its third quarter (Q3) to November trading update, the group said it continues to negotiate payment terms with its network equipment vendors that take into account local business challenges.

“Foreign currency availability for servicing our network foreign suppliers continues to be a major challenge and has hampered our ability to implement much needed network maintenance and expansion,” the group said.

“Overall, the local telecommunications industry has been struggling to meet the capacity and coverage demands of consumers as investment in long overdue capacity enhancements and routine maintenance remains severely constrained by the lack of access to foreign currency for our foreign network suppliers.”

The Reserve Bank of Zimbabwe has been assisting companies with foreign currency for production and retooling through the auction system but this has not been enough to adequately satiate local industry needs.

Due to the unreliable national power grid, Econet said it continues to invest in alternative power solutions in a bid to ensure network availability.

As green energy solutions, such as solar and battery storage, require significant foreign currency investment, the pace of investment has remained below desired levels, thereby impacting service quality.

The business has also had to continue investing in diesel engine generators in the face of sharp declines in available grid power.

Despite these challenges, for the 9-month period ended 30 November 2022, voice and data volumes increased by 32 percent and 46 percent respectively relative to the same period in the previous year.

“In order to improve quality of service, we plan to modernize the current core network to one that is virtualized in order to increase our ability to efficiently allocate network resources. Modernization of the current know-your-client (KYC) system is also underway in line with our DSP strategy.

This will include biometric detection as well as digital identification which will enable better protection for our customers against growing cyber-security risks,” the group said.

Revenue for the 9 months period grew by 9 percent in inflation adjusted terms compared to the same period in the previous fiscal year.

The growth was largely driven by voice and data volumes, which were however weighed down by tariffs which were below inflation.