Ethiopia Resumes Telecom Privatisation Plans, to Conclude Sales in February 2021

Weighing MTN, Safaricom's Chances of Success as Ethiopia Shortlists Six Operators for Two Int'l Licences

In a recent turn of events, Ethiopia has revealed plans to finalise the partial privatisation of its telecommunications sector by February 2021. This new development comes just three weeks after the Ethiopian Communications Authority (ECA) suspended the country’s telecom privatisation plans.

After presenting an update on proceedings to authorities in Addis Ababa this week, the State Minister of Finance, Eyob Tekalign said:

We have a February, January timeline for both processes. The reform is fully on track.

The ECA had earlier announced plans to sell a 40% minority stake in the state-owned telco, Ethio Telecom. According to the ECA, bids for two mobile network operating licenses had been received from 12 global and African telcos including MTN Group, Orange, Safaricom, Vodacom.

In August post-COVID-19, Ethiopia surprisingly stalled plans to continue with its privatisation plans for undisclosed reasons.

Suggested read: Telecom Monopoly in Ethiopia To Continue as Authorities Suspend Privatisation Plans

The country’s privatisation plans are now back underway, and if successfully implemented, will bring an end to the decade-long telecom monopoly by the state-owned Ethio Telecom.

Broadband Penetration To Reach 70 Million Unsubscribed Ethiopians

According to Worldometer, Ethiopia boasts a population of 115 million people as of September 2020. Only 40% of this population is subscribed to a mobile network.

The 46 million people who make up the entire 40%, are subscribed to Ethio Telecom. This implies that the 70 million Ethiopians who are not subscribed to Ethio are not subscribed to any other network at all, as Ethio remains the sole mobile network operator in the country.

With the privatisation to come, it is expected that two other telcos will obtain licenses to operate in the country. This will definitely widen mobile network coverage and increase broadband penetration in unreached areas.

Many more people, especially those in rural locations, will be able to leverage voice, SMS and data services due to increased network and internet access.

An alternative for Ethio’s Dissatisfied Subscribers

Between 2018 and 2019, Ethio lost up to 22.5 million subscribers and only regained 2.5 million subscribers this year. 20 million subscribers who opted out have yet to opt back into the telco since then.

Ethio has lost millions of subscribers since 2018

Ethiopians have in recent times bemoaned the slow, erratic internet connection and poor network quality offered by the company. Many cited the company’s hesitation to adopt new technologies, which remains unchecked due to its monopoly status.

Another challenge for Ethio’s customers is that many of them are not able to afford the data tariffs charged by the company. For instance, Ethio offers 1 gb data for 100 EBR (1000 NGN). MTN Nigeria gives an additional 0.5gb at the same price.

According to a July 2020 report by Ethio Telecom, only about 24 million subscribers (51%) used data and internet subscription on its network. 49% used voice and SMS services alone.

The presence of more telcos post-privatisation will provide current and past subscribers with a good number of data, voice and SMS pricing options to choose from. Subscribers can easily opt for whichever mobile service plan is most affordable for them.

MTN, Safaricom, Orange and other telco giants who bid to purchase equity shares in Ethio Telecom will be anticipating the next stage and hoping that the Ethiopian Communications Authority do not again develop cold feet regarding the country’s privatisation plans.

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