The entry of Starlink, a high-speed and low-cost satellite internet service provider, into the Zimbabwean market has triggered significant shifts within the sector.
As a new major player with global plans and economies of scale, Starlink offers a lower cost structure, good quality, and a massive capacity to deliver reliable services to a larger clientele base. This has profound implications for both Zimbabwean consumers and local telecoms companies.
While Zimbabweans stand to benefit from lower-cost internet access, existing telecoms companies and internet service providers face challenges in adjusting their operations to compete with Starlink’s offerings. One major hurdle is the currency disparity: local service providers are primarily revenue-generating in local currency, while Starlink operates in US dollars. This mismatch, coupled with critical forex challenges, hampers local companies’ ability to expand and upgrade their systems, leading to expensive and substandard services.
Furthermore, local service providers have a limited reach, particularly in rural areas, while Starlink’s larger capacity allows it to serve remote communities. This disparity in coverage highlights the need for local companies to invest in network expansion and upgrades, a process hindered by inadequate foreign currency and high operational expenses.
The telecoms sector in Zimbabwe is highly capital-intensive, requiring significant investments to improve infrastructure and services. However, low disposable incomes and frequent power outages pose additional constraints on service affordability and uptake. These operational realities threaten the viability and growth of the sector.
In response to these challenges, telecom players have been granted permission to increase tariffs several times, but this has sparked public outcry due to the economic hardships faced by many Zimbabweans. While Potraz justifies these increases as necessary to ensure the profitability of telecoms companies, the rising costs put further pressure on consumers.
