The Ethiopian Communications Authority (ECA) has surprisingly suspended its plans to privatise its state-owned national telecommunications company, Ethio Telecom. This comes after the ECA had previously invited bids from global and African telcos to compete for two operating licenses which would make them equity investors in Ethiopia’s telecom industry.
Etisalat, MTN South Africa, Saudi Telecom and France’s Orange were four of the twelve telcos that submitted their bids for an operating license, according to an ECA statement.
Africa’s oldest telco, Ethio Telecom, supplies more than 40 million of 115 million Ethiopians with mobile network and internet services.
Ethiopians have complained in recent times about slow, unreliable internet connection and poor network quality offered by the company. They cited the company’s unwillingness to repair or replace its outdated facilities, which remain unchecked due to its monopoly status.
The decision by the ECA will further strengthen Ethio Telecom’s monopoly in the country, without addressing these issues.
The shutting out of potential private equity investors in Ethio Telecom will impact the number of its mobile subscribers and the extent of its mobile broadband penetration. This is because the state-owned company will remain the sole mobile network operator and internet service provider in Ethiopia.
Ethio Telecom’s Mobile Subscribers
46.2 million people are currently subscribed to Ethio Telecom, which is just 5.8% more than the 43.7 million subscribers it had a year ago. 46.2 million people represent only 40% of the entire Ethiopian population, with 69 million people still unaccounted for.
Ethio had already lost a significant 34% of its 66.2 million subscribers in 2018, and only regained a meagre 3.7% this year, with 20 million subscribers (28.2%) yet to opt back into the telco since then.
Following the suspended privatisation plans by the ECA, Ethio will strive to significantly add to its mobile subscribers base in the absence of any competitors.
Broadband Penetration And Internet Affordability
Ethio Telecom’s broadband network covers an impressive 85.45% of Ethiopia. However, it charges high prices for its data plans. For instance, it charges 100 Ethiopian Birr (ETB) for 1gb monthly data. 100 ETB ($2.76) is equivalent to roughly N1,000 in Nigerian Naira and MTN offers an extra 0.5gb (1.5gb monthly data for that same amount in Nigeria.
Most Ethiopians cannot afford to purchase Ethio’s data plans. In fact, the majority of Ethio Telecom subscribers only use the voice and SMS services. Although the telco reduced broadband internet tariffs for a short period this year, the standard data plans it offered are still not economical.
Damages to fibre optic cables and power interruptions are some of the challenges Ethio Telecom faces in its efforts to expand and improve internet penetration.
Missed Opportunity for Potential Investors
MTN, Etisalat and other telco giants who bid to purchase equity in Ethio Telecom will be scratching their heads at the thought of what could have been. Most of them have been living in anticipation of the next stage after submitting a bid.
Well, that second stage is not happening anytime soon. Ethiopia still has 69 million people who are not subscribed to Ethio Telecom, and that is a very huge market for potential investors. The sudden cold feet by the ECA means that interested investors will not be able to take advantage.
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