Zambia and Zimbabwe Telecommunications Q4 2019
In this Q419 update, both Zimbabwe and Zambia's telecoms sectors continue to perform in line with our forecasts andwill follow a positive trajectory through to the end of our 2028 forecast period. Both markets' subscriber bases are highly skewedtowards the prepaid segment, and are likely inflated with a number of inactive SIMs. As such, we would not rule out periodicdiscounting of SIMs over the forecast period. With penetration rates yet to surpass 90%, both markets still hold organic growthpotential. We note the progress made by the major players in both countries towards service innovation and network expansionsinto unserved and underserved areas and migrating users to 3G/4G services. We note that in the wireline segment, increasingaccess to mobile technology will hamper growth of fixed-voice subscriptions in both markets. From a risk perspective, in Zambia, it isconcerning that the state may consider plans to take over the debt of the state-owned operator Zamtel while the regulator, ZICTA,has also been advised to consider be granted the operator concessions on its regulatory fees to reduce operating costs. Moreover,the fourth mobile network licensee has yet to deploy services in the country and may necessitate more decisive action from theotherwise relatively proactive regulator. While in Zimbabwe, the sector is feeling the impact of the protracted macroeconomicchallenges evidenced by a subscriber base decline this quarter as well as debilitating power shortages which have impactedtelecommunications services in the country.
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