The plan is not only to allow international operators to enter Ethiopia’s telecom market, it also involves letting state-owned telecom company, Ethio Telecom go international. This is what the country’s latest regulation modifying the rules establishing the telco has stated. The new Ethio Telecom Establishment Regulation approved by the Council of Ministers two weeks ago, apart from allowing Ethio Telecom to explore the country’s financial services industry, would also enable the firm to explore the international market.
“The regulation will boost our capacity and expand our reach both locally and internationally,” said Frehiwot Tamiru, CEO of ethio telecom.
“There has been unmatched growth of our assets and paid-up capital. Our total assets grew by 42 percent using IFRS reporting standard, while our paid-up capital remained unchanged at 40 billion Birr before the regulation came into effect,” Frehiwot added.
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- In addition to allowing Ethio Telecom to invest locally in the mobile banking sector and provide digital finance services, the new Establishment Legislation grants Ethio Telecom the freedom to participate in various sectors of the global market.
- The regulation also increased the paid-up capital of Ethio Telecom from Birr 40 billion (USD 1 billion based on current market price) to Birr 400 billion (USD 10 billion), making it Ethiopia’s most capitalized state-owned enterprise.
“We want to provide mobile banking services as long as our telecom infrastructure permits,” said Frehiwot, of the new regulation which also permits Ethio Telecom to venture into financial services. Frehiwot, however, said it would not outsource future mobile money services to third parties. “We may consider partnerships after utilizing our full potential,” he said.
- In the first half of the current financial year, the telecommunications provider, which aspires to become the preferred telecommunications operator among customers and partners in Ethiopia, said it posted revenues of Birr 25.5 billion ($646m) , achieving 95 percent of its target. It also said there was a 12.3 percent rise in sales compared to the same time last year.
Read also: Ethiopia Empowers Ethio Telecom To Venture Into Financial Services
- Although mobile voice contributes to almost half of the company’s sales, 26 percent contribute to data and internet, and the rest comes from foreign market, value-added services, and other sources. During the first six months of the 2020/21 financial year, Ethio Telecom also generated USD 80.2 million in forex marketing new revenue streams.
- Last week, the telecom provider invited telecom providers bidding to obtain a license in Ethiopia to share its infrastructure, with 50.7 million subscribers and a regional reach of 85.4 percent. Orange, MTN and Safaricom have shown an interest in leasing ethio telecom properties so far and are exploring new business models and agreements on how to do so.
“We want to benefit more from leasing our telecom infrastructure. We must diversify our source of income that mostly comes from voice call and internet,” Frehiwot said.
- Plans have been on since October 2019 to allow private companies (mostly foreign companies: two out of either 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) to take up to 40% stake in Ethio Telecom.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer