Ethiopia suspend privatization of Ethio-Telecom

The East African

The Ethiopian government has suspended the entry of foreign telecom infrastructure companies into the country, possibly slowing down the enthusiasm that arose after authorities announced plans to liberalize the market.

The decision, however, may not affect foreign telecom service providers and operators such as Kenya’s Safari-com and its parent company Vodacom, who had submitted expression of interest in buying a stake in Ethio Telecom. The decision came after the government reviewed the list of companies intent on buying a stake in Ethio Telecom.

According to The Reporter, the national telecom company has generated 47.7 billion birr ($1.33 billion) revenue in the 2019-2020 fiscal year that ended June30, 2020.

The revenue jumped by 31.4 percent compared to last year. Ethio Telecom, which is preparing itself for competition, has achieved 105.1 percent of its target. Forty nine percent of the revenue was generated from mobile services, 29 percent from data and internet, nine percent from international business, 9.4 percent from value added services and 3.6 from other services.

“This is an outstanding performance,” Ethio Telecom’s chief executive officer Frehiwot Tamru told a press conference on Thursday. The company generated 147.7 million US dollars from international services, jumped by 50 percent. According to Frehiwot, the revenue generated from international service increased due to the tariff reduction, and measures taken to control illegal telecom operations. However, she said the COVID-19 pandemic adversely affected the foreign currency earner in the second half. “There was no demand for international services like roaming after the spread of the pandemic,” Frehiwot said.

As part of its home-grown economic reform agenda launched in 2019, Ethiopia in June last year made an official invitation to foreign telecom companies to buy a 40 per cent stake in Ethio Telecom, a move that would end a long monopoly in the sector.

As well as service providers, the privatization of Ethio Telecom has attracted a number of telecom infrastructure companies such as Helios Towers, a UK based giant telecom infrastructure developer.

Ethiopia’s telecom sector transformation has two components, Ethio Telecom, the sole supplier of telecom services and Ethiopian Communication Authority (ECA) the one in charge of licensing for the two international telecom companies to enter the country.

Sources from Ethio Telecom told The East African that several foreign telecom infrastructure companies have approached Ethiopian authorities in a bid to enter to country’s market with intentions to build new telecom infrastructure and to ultimately lease telecom towers and rent other facilities for incoming companies.

But attempts by the ECA to bring in foreign telecom infrastructure firms have angered Ethio Telecom, whose officials argue they have spent billions of dollars on telecom infrastructure across the country in recent years. In protest, the management filed a complaint letter seeking the government’s intervention on the matter.

“The government has decided not to allow foreign telecom infrastructure companies. They will not be allowed to operate here,” Ethio Telecom chief executive Frehiwot Tamiru told the media on Thursday. Ethio Telecom intends to earn substantial amount of money in rent from entrant companies.

“We have built sufficient telecom infrastructures like fiber cables and mobile base masts that we can rent it to the newly entering companies. So the incoming telecom operators will either use our existing infrastructure by renting or build their own,” she added. 

Ethio Telecom has also written a letter to the Ethiopian Communication Authority to express its concerns over the ongoing privatisation process and is awaiting a response.

“We do not believe that the authority will take any action that could jeopardize Ethio-Telecom’s existence,” said Ms Frehiwot. “But there are still some issues that we have not agreed on,” she added.

Some 12 international telecom companies had expressed interest to buy a stake in Ethio Telecom to gain a foothold in Africa’s fastest growing economy.

Source The East African