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Mobile phone operators threatened with bankruptcy
MISA-Zimbabwe
January 18, 2007

Zimbabwe's mobile phone operators face serious viability problems which could lead to some of them winding up their businesses due to the imposition of uncompetitive tariffs imposed by the Posts and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ).

The mobile company operators have accused POTRAZ of refusing to gazette tariffs that are competitive, economically viable and commensurate with regional rates. The companies said the stipulated regional tariffs were far below economic levels given the costs associated with servicing regional and international calls.

These low rates will make it difficult for them to break even a situation which could result in some of them having to close shop.

POTRAZ agreed to let the operators increase their tariffs with effect from next week at rates pegged within imposed limits but did not take into account the termination rates of regional and international calls paid in foreign currency.

For an hour long telephone call from Zimbabwe to South Africa, at a rate of ZW$77.60 (US$0.31), a mobile phone operator will earn less than ZW$5 000 (US$20 bank rate or US$1.40 on the parallel market). Of this amount, ZW$2 250 (US$0.70) will be used to pay termination rates. The operators will be mandated to pay half of the money they earn as termination rates making it to difficult to meet other operational needs which require foreign currency.

Background
These new developments come in t he backdrop of a regulation imposed last year by the government. The regulation mandated all mobile phone operators to use state-owned Tel*One as an international gateway, thereby denying them the much needed foreign currency to pay termination rates.

The regulation was suspended after Econet and Telecel challenged it in court in light of the licenses that they were granted by POTRAZ. All mobile phone operators are allowed to have their own international gateways under Section 31 of the Posts and Telecommunications Act under which they are licensed.

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