Ethiopia licences consortium to liberate the telecom sector

Ethiopia licences consortium to liberate the telecom sector

The slow process to open up Ethiopia’s telecom market was completed with the licensing of the Safaricom-led Global Partnership for Ethiopia consortium.

The country had been one of the last in Africa to allow its national telco a monopoly on all telecom services including fixed, mobile, internet and data communications. This has stifled innovation, restricted network expansion, and limited the scope of services on offer. The consortium was in some respects a proxy for the wider influence over Ethiopia’s telecom sector between the interests of the US and China.

Only one of the two licenses on offer was secured, with uncertainty as to the timetable for issuing the second licence. In the meantime, the government in mid-2021 began the process of selling a 45% stake in the incumbent telco Ethio Telecom.

These developments have attracted considerable investment in the sector. In addition, the World Bank in early 2021 provided a $200 million loan to help develop the country’s digital transformation, while the government has embarked on its 2020-2030 program as well as its Digital Ethiopia 2025 strategy, both aimed at making better use of digital technologies to promote socio-economic development.

The country’s mobile platform has mostly been provided by ZTE and Huawei, which have offered vendor financing. Ethio Telecom has placed the expansion of LTE services as a cornerstone of its investment program to 2022. The new licensee has been barred from contracting Chinese vendors, thus opening the door to western vendors.

BuddeComm notes that the outbreak of the Coronavirus continues to have a significant impact on production and supply chains globally. During the coming year, the telecoms sector to various degrees is likely to experience a downturn in mobile device production, while it may also be difficult for network operators to manage workflows when maintaining and upgrading existing infrastructure.

Overall progress towards 5G may be postponed or slowed down in some countries.

On the consumer side, spending on telecoms services and devices is under pressure from the financial effect of large-scale job losses and the consequent restriction on disposable incomes. However, the crucial nature of telecom services, both for general communication as well as a tool for home-working, will offset such pressures. In many markets the net effect should be a steady though reduced increased in subscriber growth.

Although it is challenging to predict and interpret the long-term impacts of the crisis as it develops, these have been acknowledged in the industry forecasts contained in this report.

The report also covers the responses of the telecom operators as well as government agencies and regulators as they react to the crisis to ensure that citizens can continue to make optimum use of telecom services. This can be reflected in subsidy schemes and the promotion of tele-health and tele-education, among other solutions.

Key developments:

  • Government awards Safaricom-led consortium a telecom licence;
  • Ethiopia launches its second observation satellite, secures $200 million from the World Bank to support digital transition;
  • Ethio Telecom launches its TeleBirr m-wallet solution;
  • Government promotes Digital Ethiopia 2025 strategy in collaboration with the Internet Society;
  • Tendering process to sell a 40% stake in Ethio Telecom begins;
  • Government launches mobile apps as part of the e-Government Directorate, announces plan for $3 billion technology city;
  • Report update includes Telecom Maturity Indexes charts and analyses, Ethio Telecom data to December 2020, assessment of the global impact of Covid-19 on the telecoms sector, recent market developments.

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Developing Telecoms market report summaries are produced in partnership with BuddeComm, the world’s largest continually updated online telecommunications research service.

The above article is a summary of the following BuddeCom report:

Report title: Ethiopia - Telecoms, Mobile and Broadband - Statistics and Analyses

Edition: June 2021

Analysts: Henry Lancaster, Peter Lange

Number of pages: 98

Companies mentioned in this report: Ethio Telecom (formerly Ethiopian Telecommunications Corporation, ETC), Safaricom, Vodafone, Vodacom, Kandu Global Telecommunications, Electromecha International EthioNet, Ethio Mobile, Orange Group, Tecno Telecom, Smadl, Tana Communication, Thuraya

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