Eritrea restores telecom link to Ethiopia

Eritrea’s telecom sector operates under a state-owned monopoly for fixed and mobile services. Partly as a result of such restrictions on competition, the country has the least developed telecommunications market in Africa. Mobile penetration as of early 2019 was only about 11%, while fixed-line internet use barely registers. This is exacerbated by the very low use of computers, with only about 4% of households having a computer, and most of these being in the capital, Asmara. Although the provision of internet services is open to competition, about 2% of households have access to the internet. As a result such growth as there is in the mobile and mobile internet sectors. The national telco, the Eritrean Telecommunication Services Corporation (EriTel), continues to roll out a 3G network which provides basic internet access to the majority or Eritreans.

Considerable investment in telecom infrastructure is still required to improve the quality of services. The government has embarked on a work program to do exactly that, specifically aimed at extending services to remote areas, improving the quality of services, and ensuring that more telecoms infrastructure is supported by solar power to compensate for the poor state of the electricity network.

Additional foreign investment in telecom infrastructure, as well as introduction of more competition, would help transform what remains a virtually untapped market.

BuddeComm notes that the outbreak of the Coronavirus in 2020 is having 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 continues with infrastructure developments; EriTel extends mobile coverage; re-opening of border with Ethiopia promising improved investment opportunities, report update includes an assessment of the global impact of COVID-19 on the telecoms sector.

Companies mentioned in this report:

Eritrean Telecommunication Services Corporation (EriTel)