Getting a sub-par experience on Econet? They are not to blame, mostly

Back in September I wrote about the terrible experience I had on Econet and NetOne’s networks in Kadoma. I worried about smaller towns being left behind but in the comments section of the article, even Hararians made it clear they were facing similar problems. We were not crazy, Econet admits we have been getting sub-par service. And, we now have confirmation of what we all thought was the reason for this.

The mobile network operators, Econet at least, are not maintaining their infrastructure adequately. Maintaining infrastructure involves actively working on it to prevent breakdowns and damage. Econet is also neither replacing old infrastructure nor introducing new and better equipment at the required rate.

That Econet would not be doing this is a bit surprising but totally understandable after they explain themselves.

In their recently released financial statements they explained it all.

P.S Econet had a good half year, managing a 5259% increase in profits. Read more about that here.

Capital expenditure is too low

Capital expenditure is the name given to the kind of expenditure we talked about above. These are funds used to acquire, upgrade and maintain physical assets. 

Econet spent a meagre 3% of revenue on capital expenditure in the six months ending August 2021. That is around ZWL$888 million, which is about $148 million a month. It’s a lot of money, but for a company operating at Econet’s scale it’s simply not enough.

In the telecommunications industry, the benchmark is to spend between 10 – 15% of revenue on capital expenditure. In this context, the $888 million seems less impressive. That is because it should have been between $3 billion and $4.4 billion.

As a result, the infrastructure was not in the best condition to offer customers the best service possible. Econet confirmed this. 

Our infrastructure requires continuous improvement in order to continue to provide a service at the quality and scale demanded by our customers. This has not been possible in the current environment….

From Econet Wireless 2022 Half year financial results

Why Econet only spent 3% of revenue on Cap Ex.

This is where you lay your swords down, the reason is what you guessed it was – foreign currency. Or its shortage to be accurate.

The above quote went on as such:

This has not been possible in the current environment, due to the unavailability of foreign currency. 

From Econet Wireless 2022 Half year financial results

There it is, that old foe of ours – shortage of foreign currency. 

The problem is, most of the spares, let alone full equipment, required by Econet are not available in Zimbabwe. So, it doesn’t matter how willing Econet is to spend on infrastructure, they are still at the mercy of the powers that avail the funds at the forex auction. 

So, the RBZ can talk about how the forex auction system is a wild success all they want, the reality on the ground is that most companies are simply not getting enough forex there. As a result, they are failing to offer services to their own quality standards.

Econet is planning for serious upgrades

In the 6 months ending August, Econet did manage to commission 18 new base stations. In the coming periods they plan to commission 215 new LTE sites. They must be optimistic that the foreign currency situation will be resolved soon. Maybe they know something we don’t. Or it could be that it will be years before we ever see those stations but it feels good to think about it.

What about 5G? You ask. Econet says they will be joining NetOne in the 5G fraternity in the next few months. That is a costly endeavour. 

Some experts estimate that a 5G non-standalone Evolved Packet Core for up to 50,000 subscribers, including the installation and everything costs between US$250,000 and US$1.2 million. And that is in the US. In Zimbabwe, it will be higher than that for various reasons including transport.

Econet also plans to upgrade all their base stations to alternative power options. ZESA has shown it can’t be counted upon for uninterrupted power, so Econet is looking to solar and diesel to rescue them. Some base stations already have these alternatives but forex is going to be needed if all are to be upgraded thus.

So, the question is, will Econet be able to get all the forex they need for this capital expenditure? Probably not. However, that doesn’t have to stop them from planning. They know they will only be able to do a fraction of what they want to do but we might all have to be content with that. Or maybe we could demand better from those tasked with fixing the forex shortages. 

In closing

In all this, remember that here we are taking Econet at their word. We cannot know if they would have spent more than 3% on capital expenditure had the forex problem been absent. If we’re being cynical we could view this as a convenient excuse. You decide that for yourself.

So, you can be frustrated when you get sub-par service from Econet, as is your right as a consumer. However, the choice portion of your anger should be directed at the managers of the economy.