Telecommunication market

Breaking: Ethiopia unlocks one of the world’s last closed telecoms markets

For delivery man Sisay Alebachew, the difference between a good and bad day depends on Ethio Telecom, Ethiopia’s monopoly telecoms provider.

When the internet is down or too slow to use, customers struggle to place orders on the website of Deliver Addis, Sisay’s e-commerce employer, meaning he has little to do.

Other times, when the phone network is jammed, Sisay can’t reach customers to complete deliveries — he wastes precious time standing outside their homes, dialling in vain.

Sisay is thrilled, then, that after years of build-up, change finally seems to be coming to Ethiopia’s stunted telecoms sector, one of the last closed markets in the world.

Last week the government regulator invited firms to submit “expressions of interest” for two new telecoms licences that would break up Ethio Telecom’s monopoly.

Officials also plan to sell a 40-percent stake in Ethio Telecom, a move they hope will make the firm more efficient. “For a business like ours, telecoms is crucial, and it’s the most difficult challenge we face,” Sisay told AFP during a break from his rounds one recent afternoon.

“I’ve heard that many countries have a better connection compared to us. I’m hoping ours will improve when other companies join the market.”

The shake-up of the telecoms sector is a cornerstone of Prime Minister Abiy Ahmed’s economic reform agenda, although there are several big unknowns.

These include how much money outside firms will need to fork up to enter the market and what, exactly, the revamped sector will look like.

Nevertheless it’s “an exciting time”, said Deliver Addis founder Feleg Tsegaye. “I think everyone in the tech scene has at one point or another been wondering, ‘When is this going to happen?'”

Potential bidders include France’s Orange, Kenya’s Safaricom and South Africa’s MTN.

The value of licences could well exceed $1 billion each, and firms will also need to finance improvements to telecoms infrastructure held back by years of underinvestment.

Analysts point out that many firms see the cost as a bargain, given Ethiopia’s population of 110 million — plus the fact that Ethio Telecom currently has only around 44 million subscribers.

“Ethiopia obviously represents this new growth area, and any operator would want to get in on the ground floor,” said Chiti Mbizule, analyst at Fitch Solutions.

“But despite the significant potential that we maintain Ethiopia has, for any player entering this market, it’s not going to be cheap.” –

Mobile money, shutdowns –

There are some concerns that outside firms’ operations will be limited.

A central bank directive issued last month allows non-financial firms to provide mobile financial services, but only if they’re locally owned.

That could be a problem for companies like Safaricom and Orange which place mobile money at the centre of their business models.

Additionally, Ethiopia has developed a reputation for extended internet shutdowns during periods of social unrest and more innocuous events like national exams.

One of the most important things going forward will be for the government to assure outside firms they’ll be operating on a “level playing field” with Ethio Telecom, said Zemedeneh Negatu, chairman of the US-based Fairfax Africa Fund.

“It’s the biggest untapped market left in the world, so all the serious players are pretty excited about the Ethiopian market,” Zemedeneh said.