Dogfight: The Mobile Network Operator Battle For Market-share In Zimbabwe

It is hardly news that Econet has the lion’s share of market share in the Zimbabwean mobile telecommunications industry. This has the been the case for as long as we remember, even though Econet was the last mobile network operator to enter the race. Why is that? Let us explore.

The mobile network operator battle for market share

The market share as reported in the Potraz sector report for the first quarter of 2018 stands like this:

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There were 11,728,478 subscribers as at 31 March 2018. Going from the 4th quarter of 2017 to the first of 2018, there was a huge drop in active mobile subscribers, falling by a whopping 2,363,626:

• NetOne lost 2,322,968 subscribers, that was a 46.7% decline from the 4,957,105 they had in 2017. This means NetOne was largely responsible for the drop in subscribers. Prior to that drop, NetOne had been on a couple years steady rise in active subscribers buoyed by a promotional package called OneFusion. Challenges with that OneFusion are the reason for the massive decline.
• Telecel lost 203,382 in the same period. Telecel has been on a steady decline for the past few years.
• Econet was the only telco to register an increase in subscribers, growing by 162,724. They have been on a steady increase for the past few years.

So not only is Econet ahead, the gap between the leader and the others is widening. However, acquiring subscribers is only the first step, the ultimate goal is making money from them. That means getting subscribers to make calls, surf and download on the internet, send sms’s and utilise the mobile money services.

Subscriber activity

Voice traffic:

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• Econet: As you would expect, they lead the pack. Their market share was 73.7%, down from 78.2% in the preceding quarter. This means they have 73.7% of voice traffic market share despite having only 65% of the subscriber market share.
• NetOne: They managed to grow their market share to 22.1% from 14%. This was despite them losing almost 50% of their subscribers in that quarter. However, you will note that they have 23% of subscriber market share and so their voice market share (22.1%) is almost on par with that.
• Telecel: Voice traffic fell from an already low 7% in Q3 2017 to 4.1% in the first quarter of 2018. Telecel seems to be struggling to get subscribers to make calls because they have 12% of the subscriber market share and yet have only 4% of the voice traffic.

Generally, more voice traffic equals more revenue. However, not all voice traffic is created equal. NetOne and Telecel have run aggressively priced promotions which while popular with subscribers, are not as profitable for the telcos. These promotions are the reason why Econet’s voice traffic market share has been falling since Q2 of 2017, declining from 80.1% to the latest 73.7%.

Revenue from voice traffic has been falling as services like WhatsApp have grown in popularity. Steady decline in voice traffic has been the trend although there were some increases in some quarters in the last few years. All the three telcos have acknowledged this and have identified revenue from data services and mobile money as the future.

Data traffic:

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Econet happens to be leading the internet and data traffic race too. NetOne chipped away at that market share for a while as the overly generous OneFusion bundles attracted many a subscriber. Econet’s market share fell from 75.4% in Q2 2017 to the latest 67.1% and Telecel’s fell from 7.6% to 5.1% in the same period. NetOne stumbled in February 2018 and the trend was reversed. You will have noted that Econet’s market share grew from Q4 2017 to Q1 2018.

Mobile money:

Econet totally dominates with 96.8% market share. We have covered this extensively and if you want to explore on this facet of their business you can do that here.

Mobile revenues:

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With a mobile market share of 65%, Econet raked in 84.3% of the mobile revenues. NetOne took home 11.3% of the revenue despite having 23% of the subscribers and Telecel’s 4.4% market share was all that could be mustered from 12% of the subscribers.

We noted how NetOne’s challenges with OneFusion in February 2018 were devastating to the company. Years of chipping away at Econet’s market share were undone in a few weeks.

Therein lies one of the challenges NetOne and Telecel have with aggressively priced promotions. They are only able to retain a few of the promotion-seeking subscribers who seem to run back to Econet the moment those promotions end. A good number of these subscribers have multiple sim cards and pick and choose which one to recharge depending on the latest deals.

The promotions are meant to sacrifice short-term profitability in order to acquire subscribers and secure future profitability. The problem is that it is not working out quite like this. There is no long term profitability being secured from the sacrifice. So this leaves NetOne and Telecel in an unenviable position, undercutting a bigger and richer competitor only for the undercutting to not yield long term results.

In closing

It is going to take a lot to change this state of affairs and in my opinion we are going to see Econet extend its dominance in the foreseeable future. It is not impossible for NetOne and Telecel to challenge Econet but leadership challenges mean we won’t see that anytime soon.

This is not to say the leadership teams at NetOne and Telecel are not capable. Rather it is because they have to contend with a lot of issues that have nothing to do with their business.

We cannot possibly expect them to focus on their jobs when they have terrible job security – they could be here today, gone tomorrow and back the day after that. They often have to scheme just to stay on their companies’ board of directors as a result. We are no closer to resolving ownership wrangles that have been going on for years.

For our sakes, we hope the boardroom squabbles are squashed because we need proper competition. We need motivated, focused leaders at NetOne and Telecel lest Econet run away with the whole cake.

We hope for a continued dogfight by the mobile network operators.