El Niño threatens Zim’s telecom sector

Staff Writer

The Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) has warned of a potential slowdown in the country’s telecommunications sector due to the El Niño-induced drought.

While the industry has seen steady growth, the latest postal and telecommunications sector performance report highlights concern that economic hardship caused by the drought could dampen consumer demand and disrupt service provision.

“… on the demand side, the sector may suffer the negative spill-over effects of the El Niño induced drought which is likely to reduce aggregate demand. Hence demand for telecommunication services may contract as consumers prioritise food against data,” the Potraz report stated.

As disposable incomes shrink due to the drought’s toll on agricultural businesses, consumers are expected to prioritise essentials like food over data packages.

“The drought is likely to result in reduced disposable incomes, especially for agro-based businesses at both the primary and secondary production levels, thereby forcing consumers to cut back on discretionary spending on data-centric ICT applications such as Netflix, YouTube and other social media platforms, among others. This may result in reduced consumption of services.”

Potraz said on the supply side, the El Niño induced drought may impact on power generation, as the water levels at Kariba Dam have not risen.

Zimbabwe relies heavily on hydroelectric power generation at Kariba Dam, and low water levels due to the drought are putting a strain on the national grid.

The telecoms regulator said this has an indirect effect on the sector, as it heavily relies on commercial power for the provision of telecommunication services.

“Power cuts owing to depressed power generation impact quality of service and increase cost of service provision for operators as they are forced to rely on alternative sources of power,” Potraz said.

The potential decline in consumer demand coupled with rising operational costs for service providers paints a concerning picture for the future of Zimbabwe’s telecommunication sector.

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