Ethiopia: Ethio Telecom opens door to some local firms but continues monopoly

Ethiopia’s telecoms sector has been opened to limited competition, as officials on Thursday said some local firms have been permitted to provide internet services through Ethio Telecom’s infrastructure.

“Our objective of signing VISP (virtual internet service provider) agreements is to increase subscriptions,” said Abdurahim Ahmed, the company’s head of communications.

Officials noted that the move to open the telecoms sector to limited competition will bolster competition in the country and expand the data market.

While speaking to Reuters, Ahmad added that “There may be price reductions. There will be competition among themselves – that is the core idea.”

Though foreign companies were not allowed to provide services, eight local firms have so far signed up to provide the services that include different internet packages, Abdurahim said. In April, Ethiopian President Mulatu Teshome Wirtu said Ethiopia is not yet ready for foreign investments in its telecoms and banking sectors.

Ethio telecom is owned by the Ethiopian government and maintains a monopoly over all telecommunication services in Ethiopia. Ethio telecom generates revenue of over US$ 300 million for the Ethiopian government.

With more than 16 million subscribers of internet services in the country of over 100 million people, Ethio Telecom is the continent’s largest mobile operator, according to IT Web’s report  that noted that with over 57 million mobile subscribers as at November 2017, Ethio Telecom had beat MTN Nigeria to become Africa’s largest in terms of its mobile customer base.

The state-owned firm generated over 27.7 billion birr ($1 billion) in revenues in the first nine months of 2017/18, 70 percent of which was earned from mobile services and 18 percent from internet.

Identifying the revenue strength it has, Addis Ababa has ruled out liberalizing the telecoms sector, saying the revenue it generates was being spent on infrastructure projects such as railways. The decision to allow private companies to sell services was not a precursor to fully liberalizing the sector, Abdurahim explained.

“This has nothing to do with that. They will be providing downstream services,” he said. In other words the private companies will be providing data sent from an existing network service provider.