Thursday 2 July 2020

Ethiopia Ready to Break Telecom Monopoly

Ethiopia was one of the last countries in Africa to allow its national operator a monopoly on all telecom services including fixed, mobile, internet and data communications.

The only operator present in Ethiopia is Ethio Telecom, or  Ethiopian Telecommunications Corporation (ETC) and owned by the government. It's the only telecommunications services provider in Ethiopia, providing internet and telephone services on landlines and mobiles. It was managed 2010-12 by France Telecom, but is now back under the full control of the government.

Until now Ethio Telecom’s monopolistic control has stifled innovation, restricted network expansion and limited the scope of services offered. However, in June 2019 the government approved legislation which will open the market to competition and provide much needed foreign investment. There has also 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.

Penetration of mobile phones is low in the country: only about 4.5% of Ethiopian population own one. The mobile service is unreliable and often interrupted. The system is frequently out of work or overloaded, callers using both the landlines and mobile network are unable to connect, the situation is made worse by inclement weather. Frequent power outages and damages to fibre optic cables add to the problems.

Coverage is very low outside the capital and provincial towns. 3G services started in 2008 only in major towns so far. In 2015: 95% of the population were in a 5 km radius to the next available phone line (being either a landline or within mobile coverage). Nevertheless, the maximum distance that people from rural communities have to travel for being able to use telecom services decreased from 30 km to 5 km within the last 10 years. This is in contrast to 725 base stations built in the capital Addis Abeba alone.

Ethio Telecom operates 3G up to HSPA+ is on 2100 MHz. 4G/LTE this was launched in Addis Abeba only in 2015 on 1800 MHz (B3). 4G/LTE is available for prepaid in the capital. Ethio also operates a network in CDMA/EVDO technology, that is not compatible with GSM technology.

The monopoly of Ethio Telecom will however come to an end soon. In 2019 Ethiopia awarded two telecoms licenses to multinational mobile companies. The government also offered a minority stake in Ethio Telecom. The privatization drive amounts to 40% of the country's telecom sector.  The government expected the winning companies to start operations in 2020, initially using Ethio Telecom’s infrastructure to run their networks while building up own infrastructure.

However as of last month 12 foreign companies have submitted bids for a partial stake in Ethiopia's telecommunications monopoly. In a press release, the Ethiopian Telecommunications Authority (ECA) said it has received complete information and expression of interest from nine international telecom operators and two non-telecom companies.

According to the ECA, the bidders from the telecom sector are Etisalat, Axian, MTN, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, and Global Partnership for Ethiopia, a consortium of telecom operators comprising Vodafone, Vodacom, and Safaricom. The two non-telecom companies are Kandu Global Telecommunications and Electromecha International Projects.
It is not yet clear when the winners will be announced.

GSMA Intelligence estimated Ethio Telecom had 43 million connections (excluding IoT) at end Q2 2019. Of these, 96 per cent were prepaid with less than 9 per cent on 4G.. GSMA Intelligence estimated the number of unique mobile subscribers was 35.4 million at the end of Q3 2019, with just 20.7 million of these data connections.

No comments:

Post a Comment