Cellular fees shoot up

HARARE - Government has hiked mobile telecommunication licence fees from $100 million to $137,5 million, in a poll fundraising move expected to push cell phone tariffs up.

The financially-crippled inclusive government is desperately seeking $132 million to bankroll the forthcoming elections, and has sharply increased licence fees for mobile operators after extending the tenure of the fee from 15 years to 20 years.

So far, Econet Wireless, the country’s leading cellular company, has renewed its licence although it was unclear if it  had paid the new $137,5 million fee announced yesterday.

The increase, according to economists, could force mobile operators to increase tariffs in a bid to recover their money, warning the move risked significantly escalating inflation.

Announcing the new fees, Transport, Communications and Infrastructural Development minister Nicholas Goche, told a news conference in Harare yesterday that the new fees were a result of wide consultations and comparison within the region.

“In addition, operators will pay an annual licence fee of  2 percent of audited annual gross turnover,” said Goche.

Economic analysts predicted that government’s “unorthodox” manner of raising funds could cripple small telecomms firms as some were reeling from under-capitalisation.

John Robertson, a leading economic consultant, said it was unfortunate that government decided to increase the fees at a time when most companies in the country are struggling to raise working capital.

“The increase in licence fees is very inflationary and these telecommunications companies will try to recover their money from clients through a corresponding increase in tariffs,” he said.

Robertson said government should desist from “greedy tendencies” of viewing companies as cash cows to cover up its shortcomings.

“It’s unfortunate that government has driven the business community to such limits.

“What we need at the moment are good policies that promote the creation of new companies instead of milking the few that are striving,” Robertson said.

The new fees will apply even to small companies and according to Robertson, this could deter new investors into the telecomms industry and contribute to the demise of small firms.

Takunda Mugaga, head of research for Econometer Global Capital think-tank, said government was broke and is desperately looking for novel ways to raise funds.

“At the moment, the country is being run without following any economic blue print and the economy continues to be operated like a maize-milling machine, using whatever funds that are made available by business,” he said.

Mugaga said the hike in license fees flies in the face of the indigenisation policy being touted by government as small telecommunications will not be able to raise the required amounts.

He said the fragile government run by three political parties, is prepared to milk anyone to sustain its operations.

Although Goche refused to directly link the increase to pending elections, Finance minister Tendai Biti has said election funds will come from mobile licence fees, mining royalties, and increased duty on imported fuel among other mechanisms.

Earlier this year, Biti bankrolled a constitutional referendum through $40 million raised from a special bond floated to the local unit of Old Mutual and the state pension fund, National Social Security Authority (Nssa).  

Biti said he had no intention of going that route again to fund the forthcoming watershed polls, which he now hopes to bankroll through the hike in telecomms licence fees.

Old Mutual Zimbabwe and Nssa are Zimbabwe’s largest investment companies.

Douglas Mboweni, the Econet chief executive said the move by government gives some sort of insurance.

“Clearly, this means we will continue with our services for the next 20 years without any interruptions,” he said.

Mboweni said Econet — which has been working to introduce 4G networks in the country — said despite the hike in licence fees, the company will continue to work with Posts and Telecommunications Regulatory Authority of Zimbabwe to bring the fast, reliable and affordable 4G services to its subscribers. - John Kachembere and Xolisani Ncube

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