Infrastructure projects dominate telecoms sector capital expenditure

By Stanley James, Business Editor

INFRASTRUCTURE upgrade projects are dominating capital expenditure in the local telecommunication sector, reflecting its commitment to continue operating despite cash-flow challenges.

Findings by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) reveal that mobile network operators increased their expenditure on infrastructure development projects by over 39 percent during the first quarter of the year.

Maintaining service provision in line with global standards has been cited as a key factor in channelling funds to infrastructure development projects.

Telecommunications player, Reuben Gwatidzo notes the importance of capital expenditure.

“The sector has maintained resilience as evidenced by the rise in capital expenditure though in local currency the sector can also benefit from the availability of forex in terms of imports for state of the art machinery while the need to address the current macro instability, limited foreign currency allocations and depressed consumption can positively impact on overall growth,” he said.

Zimbabwean business executives abroad are also targeting shareholding in the local telecommunications sector.

“There are Zimbabweans abroad who are also willing to tap into the industry and this is evidenced by the rise in inquiries over the possibilities of projects that have a potential to unlock more revenues it is within such perspective that despite depressed revenues the sector can still resurrect and emerge as a pillar for growth,” said Farai Madziwanyika, Regional Coordinator Zim-Thrive Diaspora Initiative.

Network operators are exploring sustainable revenue generation and cost containment policies.

During the first quarter of the year, the total number of active mobile subscriptions marginally increased while mobile voice traffic declined by 2,3 percent.

Mobile internet and data traffic also declined by 11,8 percent although used international incoming bandwidth capacity increased.

Total mobile operator revenues increased by 10 percent to ZWL$28,8 billion, while total revenue generated by the postal and courier services also increased by 38,1 percent to record ZWL$ 646,8 million.