Cellphone companies to cut back international calls

Zimbabwean cellular phone operators have begun limiting the number of international telephone calls from Zimbabwe, citing the unavailability of foreign currency to pay for termination rates, charged by foreign networks to connect cellphone calls to recipients in their countries.

Officials in the communications industry told IRIN that the tariffs charged by local companies were no longer viable because the government was fixing the Zimbabwean dollar at "unrealistic rates" against major international currencies.

The Zimbabwean dollar is fixed at Z$250 to one US dollar, while on the informal market it trades at above Z$5,000 to one US dollar; the South African rand is fixed at R34 to the local currency, but fetches Z$760 on the informal market.

This week Zimbabwe reported that in January the annual inflation rate had reached 1,593.6 percent, the highest in the world. There appears to be no end in sight to the economy's woes: chronic shortages of foreign exchange, food and fuel persist, and unemployment levels have reached about 80 percent.

Cellphone operators' rates for international calls are about Z$86 (US$0.34 at the official exchange rate) a minute, from which they are also obliged to pay their international counterparts termination rates in foreign currency.

Douglas Mboweni, chairman of Telecommunications Operators Association of Zimbabwe (TOAZ) and chief executive officer of cellphone operator Econet Wireless, said international calls would be viable once there was a correction to international tariffs. At present, "pipes are congested because tariffs are cheap".

"Instead of people calling home, they are now sending money to Zimbabwe, which is changed on the black market and used to pay the cheap tariffs, while mobile operators struggle to raise foreign currency to pay as termination rates," said Mboweni.

Zimbabwe's three cellphone operators - Econet Wireless the government-owned NetOne and Telecel - have a combined subscriber base of about 1.5 million.

Mboweni said discussions were in progress with the regulator, the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ), to increase tariffs, as cellphone operators were using the revenue from incoming calls to settle the termination rates of outgoing calls.

In his monetary policy review last month, reserve bank governor Gideon Gono said the telecommunications sector continued to incur net debts in foreign exchange, a "situation ... threatening the stability and availability of the country's connectivity with the rest of the world".

"Because of the misalignment in our pricing, it has become cheaper for foreign telephone recipients to ask their Zimbabwean friends, family members or business partners to be the ones initiating the international calls, against which less than US$3 would be sent from abroad [for conversion at parallel market rates] to cover as long as 100 minutes ... in local currency," Gono said.

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