Potraz Vs Econet, High Court Allows Tariff Cuts

Econet Wireless Zimbabwe suffered a major blow as their bid to block price slash hit a snag with the High Court throwing away their urgent application, cumulatively allowing the regulator to cut mobile charges by a massive 30%.

Currently pegged between 23cents and 25 cents, the rates will be slashed down to 15 cents per minute, a move which Econet has greatly tried to fight as they said it will render them incapacitated and force many to lose jobs and dump their scholarship programmes.

By Toneo Tonderai Rutsito

The tariff will see another adjustment to 12 cents per minute in 2015 and 9 cents per minute in 2016, while interconnect rate will be further adjusted from the current seven cents to five cents by December 2014, to a four cents in 2015 and ultimately three cents by 2016.

Supporting their move and strategy, Potraz said that the move is a win –win situation for both the subscribers and mobile network operators as subscribers will only be billed for what they have exactly consumed.

“The issue of reducing voice tariffs would not affect the mobile network providers’ revenues in a negative way, but it will make their customers pay for what they are getting,” Potraz economics and financial analyst Talent Munyaradzi told The Source.
“It’s not like we are forcing the network providers to adopt the new tariffs but this is a process where the network providers are consulted by the regulator to reach an agreement on the new tariffs which can be implemented.”

Potraz said in October that it had abandoned the COSITU pricing framework – an International Telecommunications Union’s model for the determination of costs and tariffs (including interconnection and accounting rates) for telephone services — in favour of a long run incremental cost (LRIC) model, which will see tariffs progressively coming down in response to an ‘outcry’ by consumers.

“There are a lot of factors which are considered in implementing tariffs. The telecommunication players have invested a lot but customers must be considered as well as the economic situation in the country when it comes to mobile network tariffs,” said Munyaradzi.
According to BH24, Potraz issued Regulatory Determination Number 1 of 2014, a circular on Implementation of Excise Duty on airtime or network usage for voice, internet and data services provided by telecommunications services on October 16.

The determination fixes new national interconnections tariffs and mobile voice tariffs for communications operators for the period December 2014 to December 2016.

Econet challenged the decision at the High Court through an urgent application.

It argued that the decision should be put on hold pending the finalisation of the legal dispute between the two parties.

But in a judgment delivered last week, Justice Mary Dube threw out the application for lack of urgency.

“The application is not urgent,” said Justice Dube. Econet that was represented by Tawanda Nyambirai argued Potraz amended the existing approved tariffs without affording it a right to be heard on whether or not the tariffs should be varied.

This, Nyambirai argued, violated the principles of natural justices and provisions of the Constitution.

He further contended that the determination was biased against Econet as the tariff reduction would weigh heavily the country’s largest mobile service provider than on the other operators who had not bothered to pay the $137, 5 million licence fees.

Nyambirai also said the reduction in tariffs would force Econet to retrench some of its workers and downscale its distribution network that has 20 000 jobs. Further, Nyambirai said his client would be forced to discontinue some of its scholarship programmes in which it pays fess for more than 40 000 less privileged members of the society.

Potraz lawyer James Chikobvu Muzangaza denied, in his counter arguments, that the determination was discriminatory. He said the licence fees which other operators also pay had not been slashed and they have to fork out the same amount.

Muzangaza dismissed Econet claims that it was not given a chance to be heard arguing that the company participated in the research carried out by Potraz since last year. This, he said, was the reason why Econet went to court suing Potraz.

Muzangaza said Econet should have requested reasons from the Ministry of Post and Telecommunication. He said in the event it was not satisfied with the reasons should appeal to the Administrative Court in terms of the law.

“The data tariffs are on the reasonable range, the tariffs charged by fixed network provider TelOne were found to be within reasonable range. It’s just the mobile tariffs that were found to be about 30 percent above what would be acceptable.”

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2 thoughts on “Potraz Vs Econet, High Court Allows Tariff Cuts

  1. Econet are a bunch of gready people. They are saying the tariff slash will affect them yet they make profits in excess of 100 million? Which other company is making such profits in Zimbabwe. Clearly they are ripping off clients with such high tariffs. Zimbabwe has one of the most expensive calling rates the world over. In other countries intra-network calls costs almost nothing. Good move potraz… the next is to look at data tariffs, which are high in Zimbabwe like no one knows

  2. This will create cascaded unintended consequences.Well it is about time that POTRAZ removes its price fixation of international call termination at 20 c.If they dont more and more people might see an arbitrage opportunity to bring in traffic using VoIP GSM gateways since they buy air time just for 1 cents and sell for the mandatory 20c.

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