Econet warns of ‘drastic measures’ after power cut, and the impact will be felt beyond telecoms

Zimbabwe power
Zimbabwe's power crisis have telcos in crisis

Econet Wireless will be forced to take “drastic measures” if the power crisis is not resolved immediately, the country’s largest telecoms company said Monday, in a strongly-worded statement that reflects the deepening frustration across business in Zimbabwe over load-shedding.

The company lost service for much of Saturday, after its main network control hub was hit by a power cut and its back up systems suffered a failure during switchover. The blackout affected communications and hit EcoCash, which handles 95% of the $1.4 billion transacted on mobile money platforms per quarter.

“Econet would like to point out that the company cannot sustain the current operating conditions of running back-up generators for 14 to 18 hours daily, based on the current heavily eroded tariffs. We are also now incurring higher costs because of the heavy reliance on generators as we now have to service the generators every fortnight, as opposed to the scheduled quarterly service intervals,” Econet said in its statement.

 “Our network was designed to withstand a set level of power outages and the highest such level has now been exceeded as a result of the ongoing rolling power outages being experienced across the country.”

The company says its diesel allocations to base station sites were not enough to offset the severity of the power outages, and that current tariffs made the extra cost unsustainable. This means some base stations have to be switched off during power outages, resulting in “the degradation of all services supported by the network in terms of service availability, call setup, call success rates, dropped call rates and speech quality”.

Econet: drastic measures needed

Said Econet: “It is increasingly becoming untenable and uneconomical for Econet to guarantee a reasonable grade of service and optimal network uptime under the current conditions. With the ongoing aggressive ZESA load shedding, our requirements are at more than six times the diesel we are currently using in order to provide uninterrupted service.”

While tariff hikes have raised the ire of customers, Econet says they remain largely sub-economic in comparison to costs of fuel and the erosion of the local currency.

Econet then warns it will have to take action to protect its business.

“Given the foregoing, we have stepped up our engagement with the relevant stakeholders with a view to finding an urgent solution to the problem that Econet and the mobile telecommunications industry faces due to the national power crisis. If the authorities that oversee the industry do not offer quick viable solutions as required in the current crisis, the business will have no choice but to take drastic measures to ensure sustainable service.”

While Econet has not stated what form this “drastic action” would take, officials say the company is likely to immediately raise tariffs sharply and shut down swathes of the network to save costs.

This would not be the first time Econet would have to take such action. During the power crises in 2009 and 2012, Econet would at times have 70% of its base stations on expensive diesel power, which cut into the company’s earnings and affected quality of service.

Over the first quarter of the year, mobile networks’ operating costs increased by 6.4% to $185.9 million from $174.8 million, according to a report by industry regulator POTRAZ. Revenues across the industry were down 6.4% compared to the previous quarter.

Costs are likely to rise going forward due to the power crisis.

Network outage: beyond telecoms

The impact of downtime on mobile networks will be felt beyond the telcos themselves. According to RBZ data, electronic transactions account for 96% of all transactions in Zimbabwe. Mobile money accounts for 87% of the total, moving around $5 million per day.

POTRAZ data shows there were close to 400 million transactions, worth a total $1.4 billion, in the first quarter of 2019. Network blackouts are therefore a big hit on the economy.

Zimbabwe mobile
Mobile money at the centre of largely informal economy (POTRAZ)

The power crisis has weakened Zimbabwe’s already fragile industry and further damaged the country’s investment climate. Econet is the latest of a number of large companies to show their frustration at the power cuts.

Sunny Yi Feng, a recently opened tile factory in Norton, says it suffered damages of about US$1.3 million after 250 000 square metres of tiles were damaged in the production due to power cuts. Surface Wilmar, a manufacturer of cooking oil and a range of household goods, has also publicly criticised government’s poor handling of the power crisis.