Foreign Currency crisis hit Telecoms industry

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A severe foreign currency crisis has hit the Zimbabwean telecommunications industry with most of the local Telecommunications companies owing huge amounts of money that they are failing to pay to foreign firms, causing serious disturbances of networking systems as the  foreign firms are now withdrawing their services due to failure to pay by local companies.

Local telecom operators are owing millions of dollars to foreign firms for maintaining and upgrading their infrastructure and their continuous failure to pay will cause a continuation of the on -going disruptions to telecommunications networks.

Among the most owed foreign firms by local Telecom companies are Chinese telecom conglomerates Huawei Technologies Company Ltd, Ericsson, ZTE Corporation and also Swedish Firm.

Huawei, ZTE and Ericsson have since suspended their operations until they are paid for rendered services or receive future payments following helping local firms to maintain and upgrade their systems but failing to be paid back for their services.

The current telecommunications infrastructure is failing to handle increased voice and Data on the Unstructured Supplementary Service data platform due to the delays in payments of the foreign firms by local firms, the reason why there has been network disruptions that started a few days ago.

Commenting on the current network crisis, Postal and Telecommunications regulatory Authority of Zimbabwe (POTRAZ) Director-General Gift Callisto Machengete said that the most affected network operator is Econet and reasons for this might be Econet’s overload on their systems and other related things, causing them to fail to pay Ericsson. He added that Econet might be successfully negotiating with ZTE and Huawei but they have a serious problem with Ericsson.

Machengete further said that Econet is supposed to pay Ericsson since they have a debt which they are failing to service and that is the reason why Ericsson is now resisting to come and help them to strengthen the networks.

Ericsson now want some upfront payment to be made or a huge deposit of the money to be made but given the current foreign currency crisis in Zimbabwe, Econet is failing to pay the debt.

Machengete also said that POTRAZ has already engaged Ericsson to continue assisting Econet and explained that their current failure to pay was due to an on going foreign currency crisis and Econet would pay as soon as the crisis stabilized.

The reason why most of the country was affected by the network disruptions Is that Econet is the largest Telecommunications company In Zimbabwe.

Other platforms like TelOne and NetOne were also affected because they are also owing Huawei who supplies them with technological gadgets for their system maintatence and upgrades, according to sources.

Machengete further said that not only Econet was affected by the crisis, there is a problem also with TelOne’s failure to clear it’s debt, which has seen POTRAZ approaching the Reserve Bank of Zimbabwe for assistance on the issue and getting good assistance from the RBZ.

He moved on to say POTRAZ has been doing everything possible to ensure that local Telecommunications services remains vibrant and was aware that all of the local companies were having forex problems and failing to pay foreign firms.

Having foreign currency, according to Telecommunications industry sources, would allow local telecommunications companies to pay licensing fees as a way of appreciation to using networks which are serviced by the foreign firms.

Moreover, it would also help in payments for maintenance and upgrades of Switches at Base Stations that helps in calling processes and the transmission between Base Stations and also it would assist in payments for internet bandwidth.

Local telecom firms Econet, TelOne, NetOne, Telecel, Africom and Powertel all heavily relies on the foreign firms and the need keeps growing due to factors like increased internet penetration, mobile voice traffic, fixed voice traffic, mobile internet data and international incoming internet bandwidth

Telecommunications infrastructure, due to this rise, needs to be constantly maintained and upgraded, hence the need for foreign currency to pay the foreign firms who are responsible for the maintenance and upgrading.

Econet is reported to have confirmed in their e-mailed responses to local Publication Newsday that they were having forex exchange challenges and an increase in network usage by customers

What is further complicating the forex situation Is the recent 2019 Monetary Policy Statement that was issued by the RBZ as it legalised local currency into official tender, forcing Telecommunications companies to seek an upward review on tariffs.

Close sources to the industry revealed that soon after the release of The Monetary Policy Statement by the RBZ, telecom companies wrote to POTRAZ seeking an upward tariff review and Machengete said POTRAZ was still considering the proposals and would need two weeks to look into the tariff review issue.

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