Is End In Sight For Ethiopian Telecoms Monopoly?

Written by Dana Sanchez

South Africa’s Vodacom Group opened its first office in Ethiopia Tuesday, hoping to secure a foothold in Africa’s last remaining large market that still has a government-controlled monopoly on telecommunications, according to a report in BusinessTech.

Vodacom joins South Africa’s MTN Group, Africa’s largest mobile phone company, which already has a similar licence to open an office and offer value-added services in Ethiopia.

In July, Ethiopia’s state-run Ethio Telecom signed a $1.6 billion deal with China’s Huawei and ZTE Corp. to expand mobile phone infrastructure, including rolling out 4G services in Addis Ababa.

Mobile communications subscribers across the continent totaled almost 650 million last year, up from 25 million in 2001, according to World Bank data, the report said.

The Ethiopian government ruled out opening telecommunications to the free market, saying the $321 million it generates each year is being spent on vital infrastructure projects, according to BusinessTech.

But Vodacom wants to be prepared, just in case. It has a licence to provide value-added services – all services other than standard voice calls – Vodacom CEO Romeo Kumalo told Reuters.

“But more importantly we want to position ourselves so when the market opens and the government does decide to grant licences in the consumer sector, (we’ll be there)” he said.

“We would invest here tomorrow. Ethiopia is probably the most fantastic telecoms market on the continent. One operator, 80 million people, the economy growing at 7 percent – it’s a great market.”

Ethiopia’s Ministry of Communications and Information Technology said more than 200 companies have applied to provide telecommunications services.

Safaricom, Kenya’s top telecoms operator, has expressed an interest in Ethiopia.

Ethiopian Prime Minister Hailemariam Desalegn, who took office last year, told Reuters in October that the government would not sell Ethio Telecom, which has a monopoly.

He said foreign investors are attracted to telecommunications because it’s a “cash cow” that provides profits without the effort needed to establish factories for manufacturing, an area that would create more jobs and growth, BusinessTech reported.