Telecel Loses Nearly 100k Subscribers – Is There Light At The End Of The Tunnel?

For almost half a decade, the Telecoms Sector Report by POTRAZ has reflected poorly on Telecel’s performance. The report for the first quarter of 2020 is out and you guessed it, again it reflects poorly on Telecel.

The 3rd largest mobile network provider (aka the smallest) is in trouble on many fronts but this won’t come as a surprise to many of you who follow Techzim as we have detailed Telecel’s struggles one quarterly report at a time.

Where is Telecel now?

10% drop in subscriber count!

Telecel’s subscriber count has dropped by 9.4% from 910 677 to 825 478 since the end of 2019. What makes it worse is the fact that whilst Telecel lost subscribers, their rivals Econet and NetOne grew by 5% and 4.9% respectively.

This is a far cry from Telecel’s 2014 peak subscriber count of 2.23 million – and in 2013 they actually had more subscribers than NetOne.

POTRAZ attributes the decline in Telecel’s active subscribers to limited “base station availability”. A year ago, we noted with concern how Telecel at the time had less than 20 4G/LTE base stations in the whole of Zimbabwe. That position hasn’t changed much since. They had 16 base stations at the end of Q1 2020.

Those 16 base stations account for only 1.6% of LTE base stations in the country. They are faring a bit better in 3G terms with 14.9% of 3G base stations but that too is far behind what rivals Econet (56.7%) and NetOne (28.4%) have.

This lack of infrastructure will continue to hold them back because it means in many areas Telecel simply cannot offer service to begin with. The fact that they can’t offer this service reliably has a domino effect which is seen on their revenues…

Revenue

When you look at the share of revenues you’ll realise that Telecel only had 1.6% of the revenues made by all mobile operators which amounts to ZW$33.2 million. That number in a vacuum might seem respectable, but once you consider that Econet and NetOne made ZW$1.7 billion and ZW$343 million respectively – it paints a pretty gloomy picture of where the struggling MNO is.

When you consider that Telecel is making 10 times less than its closest rival and has far less infrastructure it’s hard to see light at the end of the tunnel. Telecel is in a position where they need to invest far more than their rivals to simply catch up but they are making far less than said rivals. In short tingangoti varipama1.

Catch 22

One would hope that since Telecel can’t compete in terms of providing internet service to customers they would do better at voice traffic. That too is a disaster as the network operator has a measly 1.5% of the voice traffic market share.

Mobile money?

Telecash isn’t fairing much better. In fact, at a time when both EcoCash (+3.7%) and OneMoney (18.4%) grew, Telecash users fell by 1.4% and at the end of the 1st quarter there were just over 50 000 people using Telecel’s mobile money service.

What’s the way forward?

A few weeks ago the ICT Ministry said they have worked with Telecel to map out a “recapitalisation strategy” our attempts to get more information regarding this strategy has been in vain which usually points to the lack of such a plan to begin with.

It’s also important to keep in mind that COVID-19 will make Telecel’s turnaround plans harder to execute. The economy is contracting and is expected to continue shrinking which will probably mean less revenues for the mobile telecoms sector.

Telecel’s future is extremely uncertain and it’s hard to see how they turn things around. Outside investment is extremely unlikely when you consider that Telecel has ownership issues that make it unclear who is actually in control of the company.

That coupled with the fact they are operating in a country with an economy that is weakening on a daily basis makes them pretty unattractive for the type of investment that would make them competitive against NetOne at the least.

At the end of the day, Telecel’s problems are not economic problems, they are leadership problems which is why until they have the right leadership at the helm it’s unlikely that consumers will see any change…