‘Mobile money, data to drive MNOs’

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HARARE – Mobile money platforms and data are set to be the growth frontiers for local mobile telecommunication firms going forward, as fierce competition in the sector is eating into margins.

This is according to analysts Akribos Research Services.

Zimbabwe’s three mobile network operators (MNOs) – Econet Zimbabwe, Telecel Zimbabwe and NetOne – are immersed in battle for market, with Econet currently edging competition.

The analysts says the stiff competition within the sector has the negative effect of corroding margins.

“The sector’s margins are slowly eroding as some players seek to grow market share.  Fighting on the price front in telecoms has the effect of increasing the cost of acquiring a new subscriber, lowering the gross margin – the net revenue that an operator receives per minute after factoring in top-up charges that belong to other service providers like the government and regulators, including value added (VAT) and excise tax, and the cost of connecting a customer to complete a call on a rival’s network (interconnection fees), lowering the combined average revenue per user (ARPU) and fails to reflect the true cost of doing business in the industry.

“The long-term result is a decline in industry and firm profitability which in turn could end up diminishing the sector’s contribution to the national revenues,” said Akribos. 

Despite cheaper over-the-top services (OTTs) maintaining a stranglehold on income that these companies generate through voice calls, observers say they may help drive data usage among local mobile telecoms services users.

Popular OTT voice applications such as Viber, Skype and WhatsApp.

Other key applications that are driving data usage among users include Facebook, Twitter and Instagram among others.

“With penetration (sim-based) now greater than 100 percent and internet density just shy of 50 percent the Zimbabwean telecommunications industry has been experiencing strengthening fundamentals and data and mobile money remain the next growth frontiers for MNOs in Zimbabwe and Sub Saharan Africa,” says Akribos.

Latest official statistics for the sector point in the same direction.

According to the Postal and Telecommunications Regulatory Authority (Potraz)’s third quarter (2017) report, total mobile money transactions during the period jumped 87 percent to $486 million compared to the second quarter figure of $259 million.

The statistics also showed that the number of registered mobile money subscriptions rose by 15 percent in the third quarter to reach 3 867 676 active subscribers compared to the second quarter’s figure of 3 352 476.

Of the total number of the registered mobile money subscribers, Econet accounts for 96 of the total market share while NetOne and Telecel trail behind at 1, 3 percent and 2 percent respectively.

All the mobile operators registered an increase in active mobile money subscriptions with Econet and Telecel increasing by 13, 5 percent to 3 738 056 and 43 percent to 78 180 in that order. NetOne registered the biggest growth at 291 percent to 51 440 from 13 137 subscribers in the previous quarter.

With regards to mobile internet data, the report revealed that usage increased by more than double the previous quarter usage to record a 39, 1 percent increase to 4,129.4 gigabytes (GB).

At the same time, active internet penetration rate increased by 0, 9 percent to reach 49, 5 percent from the 48, 6 percent which was recorded in the second quarter.

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