Liquid “adjusts” Internet prices… or, Zimbabwe’s Internet Pricing Puzzle

Liquid, Zimbabwe’s largest fixed internet provider, has announced an internet price “adjustment”. The new prices will be effected on 17 October for those buying bundles, but those paying for unlimited packages will pay from 1 November.

Here’s what the notice says:

Liquid Home would like to advise you of a price adjustment on our products and services effective 17 October 2024. This price adjustment is consistent with Liquid Home Zimbabwe’s continued efforts to offer reliable service.

Please be advised that all Unlimited subscriptions will be billed at the new price starting on the 1st of November 2024 and any prepayments must be made against an invoice for the prepayment period.

Liquid doesn’t mention the new prices, which is strange, so our assumption is they are just preparing the market for the change. Still doesn’t make sense though announcing new prices without mentioning the actual price. Why not say, the price was that, and now it’s this? All strange business really, but more on this in a bit.

For now, we have to speculate what this adjustment is.

If this was a price reduction, they would have just come out straight and mentioned it excitedly, so this has to be a price increase. But a price increase doesn’t make sense right now given all the excitement about Starlink and the general perception that incumbents like them are ripping us off (we think it’s not true – but that’s a separate matter).

So this is not a price reduction and it can’t be a price increase, which leaves only one thing – likely a Zig price increase!

See, internet providers in Zimbabwe have fixed separate Zig and USD prices. The Zig price is not pegged to the exchange rate. The government, through the regulator Potraz, won’t allow it because it shines a light on the exchange rate, which shines a light on the state of the economy. So when the Zig is devalued, as happened 2 weeks ago, internet providers have to seek the regulator’s approval to increase the Zig price to roughly match the USD price.

This means when the local currency loses value, the effective internet price drops. This is why Zimbabweans rush to pay their internet bills at such times. It’s bad for business because it means during that time, internet providers are selling their product at less than what they and the regulator settled on as the fair price.

So while their customers are rushing to buy, the providers are rushing to Potraz for a Zig tariff review. It’s a game where businesses try to keep pace with devaluation while consumers try to take advantage of temporary price discrepancies.

This is why Liquid’s notice today says “prepayments must be made against an invoice”. It’s the legal equivalent of “our swipe machine is not working” or “We’re limiting Zig purchases to Zwg 500 maximum today!” It’s an attempt to prevent exchange losses.

We suspect that’s why the prices are missing. We also suspect that’s why this notice is tucked away in a small advert on page 5 of a physical newspaper. Who still reads those? At the time of writing this, Liquid’s social media pages don’t have the notice. The company likely doesn’t want any attention to this before the new prices take effect.

This “open for business” country is a crazy place to do business.

There’s another unfortunate angle to all this. When internet providers are eventually able to increase the prices, they generally peg them higher than the exchange rate. They do this to create a buffer in case there’s another wave of the local currency devaluation. Yes, if you’re paying for your internet in Zig soon after a price adjustment, you’re likely paying more than the USD value of the same.

Do spare a few minutes to do the price calculation gymnastics before paying for anything in Zimbabwe. Someone should build an app for this!

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