Ethiopia sets February 2021 deadline for telecom liberalisation

Ethiopia was one of the last countries in Africa to allow its national telco a monopoly on all telecom services including fixed, mobile, internet and data communications. For many years Ethio Telecom’s monopolistic control stifled innovation, restricted network expansion and limited the scope of services on offer. However, in June 2019 the government approved legislation which will open the market to competition and provide much needed foreign investment. Two licenses are to be offered to two international operators, with a deadline set for February 2021. At the same time the government aims to part-privatise Ethio Telecom, with a 45% stake in the company to be made available.

Despite the stimulus from market competition, there has been considerable investment in telecoms services, infrastructure and service expansion projects in recent years. Ethio Telecom has secured a network monitoring platform to help it improve services and has also revised plans to launch a telecom satellite, while the government initiated the construction of a $3 billion technology city.

Most of the technologies deployed thus far have been provided by ZTE and Huawei, which have often been preferred for offering vendor financing. In preparation for competition in the mobile market, Ethio Telecom has placed the expansion of LTE services as a cornerstone of its investment program to 2022.

After years of low uptake due to prohibitive pricing, Ethio Telecom reduced tariffs by up to 50% in 2018, resulting in a sharp increase in data and voice traffic. With retail prices now comparable to other more developed markets in the region, pricing will come under further pressure from 2021 as the two international new operators expected to be licensed launch services. This should be a catalyst for steady growth in all sectors in coming years.

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 gives February 2021 deadline to licence two new market entrants;
• Ethiopia builds its second observation satellite;
• Raxio Group begins work on its Tier III data centre in Addis Ababa;
• National Bank opens up Ethiopia to m-money services;
• Government bans foreign infrastructure companies from investing in Ethiopia’s telecom sector;
• Ethio Telecom secures mobile network monitoring platform;
• Fibre cabling on the Addis Ababa and Djibouti rail route to be used for telecom services;
• Government launches mobile apps as part of the e-Government Directorate, announces plan for $3 billion technology city;
• Major changes anticipated in the second Growth and Development Plan;
• Report update includes Telecom Maturity Indexes charts and analyses, Ethio Telecom data to June 2020, assessment of the global impact of Covid-19 on the telecoms sector, recent market developments.

Companies mentioned in this report:

Ethio Telecom (formerly Ethiopian Telecommunications Corporation, ETC), EthioNet, Ethio Mobile, Orange Group, Tecno Telecom, Smadl, Tana Communication, Thuraya.