Executive summary
A market with ten years of lost time to catch up on
This annual report provides a comprehensive overview of trends and developments in Zimbabwe’s telecommunications market. Subjects covered include:
- The impact of the economic and political crisis;
- Key statistics;
- Market and industry overviews;
- Government policies affecting the telecoms industry;
- Market liberalisation and regulatory issues;
- Telecoms operators – privatisation, acquisitions, new licences;
- Major players (fixed, mobile and broadband);
- Infrastructure development;
- Mobile voice and data markets;
- Average Revenue per User (ARPU);
- Convergence (voice/data, fixed/wireless/mobile);
- Internet and broadband development and growth, including 3G mobile;
- Broadband services and pricing trends.
Zimbabwe’s economy has contracted for ten years in a row under gross mismanagement by its political leaders, sending annual inflation to an unprecedented rate of several billion percent and the exchange rate of the Zimbabwe dollar to more than 50 billion per US dollar. In 2009 the government finally gave up and allowed foreign currencies as alternative legal tender, which had already been the unofficial fuel of the local economy for years.
The ‘dollarisation’ has done miracles for the country’s telecom industry: Network operators, now able to bill their customers in hard currency, have regained a certain degree of planning reliability and access to funding for network expansions. Hundreds of millions of US dollars are now being invested into the three mobile networks – Econet, NetOne and Telecel Zimbabwe. Mobile penetration has more than quadrupled within two years to reach 57% at the end of 2010, despite the fact that consumer prices initially rose – artificial price caps in local currency had meant that prices had previously been extremely low when converted into hard currencies. As a consequence, the average minutes of use on Zimbabwe’s mobile networks were ironically among the highest in the world, and the networks were congested. Prices are now more in line with other African markets again.
The normalisation of Zimbabwe’s economy is reflected in the International Monetary Fund’s (IMF) forecast of continuous GDP growth at around 5%, following a spike to 9% in 2010.
NetOne’s parent, TelOne (formerly PTC) still holds a de-facto monopoly on fixed-line services in the country. A second national operator (SNO), TeleAccess was licensed in 2002 but had its licence withdrawn in 2005 due to non-performance resulting from difficulties to raise funding. Another licensed operator, Afritell (a public-private partnership) also failed in bringing competition to the fixed-line sector. However, the government has announced that it recognises the urgent need for a second operator and that it is looking at ways to resuscitate or retender the licences.
In parallel, the government is planning to privatise up to 60% of TelOne and NetOne, either through an IPO or a strategic partnership with a foreign investor.
Despite the limited fixed-line infrastructure, Internet usage in Zimbabwe has continued to rise. In an environment of strictly controlled traditional media, citizens turned to the Internet for independent information and communication. However, limitations of international bandwidth for the landlocked country have affected development of the sector. New fibre optic links are now being deployed to improve international connectivity via neighbouring countries with access to international submarine fibre optic cables.
The ISP market is reasonably competitive with six major players. Eight companies have been licensed to provide VoIP telephony services. Several data carriers have been licensed and are rolling out national fibre backbone networks. ISPs have begun rolling out wireless broadband access networks, and the first 3G mobile broadband service in the country was overwhelmed by demand within weeks after launch.
After ten years in crisis, Zimbabwe’s telecoms market has a lot of catching up to do. The boom in all market sectors is expected to continue.
Market highlights:
- Multi-currency system normalises telecom sector;
- Estimates to end-2012 for mobile, fixed-line and Internet market;
- Profiles of major players in all market sectors;
- TelOne, NetOne privatisation planned;
- Second fixed-line licence expected;
- New draft ICT Bill;
- Hundreds of millions of US dollars in network expansions;
- New domestic and international fibre connections;
- 3G spectrum allocation, service launches;
- Internet and broadband pricing trends.
Estimated market penetration rates in Zimbabwe’s telecoms sector – end-2011
Market
| Penetration rate
|
|---|
Mobile
| 72%
|
Fixed
| 3%
|
Internet
| 12%
|
(Source: BuddeComm based on various sources)
Companies covered in this report:
TelOne, NetOne, Econet, Telecel, TeleAccess, Afritell, Liquid Telecom, DataOne, Powertel Communications, Telco Internet, Broadlands Networks, Aquiva, Africa Online, ComOne, Ecoweb, MWEB, Zimbabwe Online (ZOL), Zimbabwe Internet Service Provider Association (ZISPA), Telecontract, Dandemutande, Taurai Zimbabwe.
