Africa Communications Economy Ethiopia Finance Government Infrastructure Telecom

Ethiopia may no longer hold monopoly over telecommunications

International companies such as MTN Group Ltd., Orange SA and Vodafone Group Plc’s African unit are among the ones interested in expanding in Ethiopia, seen by many as the last major country on the continent closed to independent operators. Having the second-highest population in Africa and featuring low levels of Internet traffic, these and other companies are eager to enter this market with such great potential.

According to Balcha Reba, director-general at the Ethiopian Communications Authority, as the population of 100 million continues to grow it is a requirement that Ethio Telecom must be privatised, since that will increase the options for customers, generate investment and, as such, the quality of the service will be better. “We have a monopoly. That’s our problem”, Reba said.

Once the market is more mature and competitive, the government of Ethiopia (which will hold 51% of the telecommunications company’s shares after it has sold 49% of its share in 2020) may give up majority control over its monopoly at a later stage.

Balcha went on, saying: “Whenever a company’s privatised, the 49% also have their say”. Among some of the company’s equipment suppliers figure names such as Huawei Technologies Co. and Ericsson AB, which could be reviewed when the sale of the minority stake takes place.

In order to foreign carriers operate successfully in the territory, it is required that the sale that will take place next year also boosts the country’s scarce foreign-exchange reserves. That’s needed when it comes to paying for imports, he added. Besides that, a new communications law forces outside players to consent to “lawful surveillance” in regard to customer information.

Aside from the two mobile phone network licences scheduled for March 2020, the government may issue more licences in the long term, while also contemplating the possibility of issuing mobile banking licences. The country’s central bank is currently trying to remove restrictions, since international operators have discovered a lucrative way of offering financial services in many African regions where there’s little banking infrastructure.

This month, the country will begin to have 5G technology, though it must first decide on the frequency band, he stated.

With more than 50 million subscribers and annual sales of around 45.4 billion birr (1.5 billion dollars), Ethio Telecom is the largest telecommunications company in the country.

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