Ethiopia pulls plug on entry of foreign telecom companies to its market

The Ethiopian government has suspended the entry of foreign telecom infrastructure companies into the country, possibly slowing down the enthusiasm that arose after authorities announced plans to liberalize the market.

Last June, the country’s communications authority reported that it had received 12 expressions of interest (EoI) from nine telecom and two non-telecom operators looking to secure a partial stake in the country’s telecommunications industry.

The Ethiopian Communications Authority (ECA) said bids had been received from nine telecom operators: 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 decision, however, may not affect foreign telecom service providers and operators such as Kenya’s Safaricom and its parent company Vodacom, who had submitted expression of interest in buying a stake in Ethio Telecom.

The decision came after the government reviewed the list of companies intent on buying a stake in Ethio Telecom.

“The government has decided not to allow foreign telecom infrastructure companies. They will not be allowed to operate here,” Ethio Telecom chief executive Frehiwot Tamiru told the media.

As part of its home-grown economic reform agenda launched in 2019, Ethiopia in June last year made an official invitation to foreign telecom companies to buy a 40 per cent stake in Ethio Telecom, a move that would end a long monopoly in the sector.

As well as service providers, the privatisation of Ethio Telecom has attracted a number of telecom infrastructure companies such as Helios Towers, a UK based giant telecom infrastructure developer.

Ethio Telecom intends to earn a substantial amount of money through rent collected from the successful entrant companies.

“We have built sufficient telecom infrastructures like fibre cables and mobile base masts that we can rent it to the newly entering companies. So the incoming telecom operators will either use our existing infrastructure by renting or build their own,” she added.

Ethiopia as one of the last countries in the world with a complete monopoly over telecommunications services and licensing is part of the government’s commitment to liberalize the country’s telecoms and ICT infrastructure. The country reportedly needs US$2.2 billion in investment to bring services up to scratch.

The number of mobile subscribers in the country has grown from 17.2 million in 2011/2012 to 40.2 million in 2017/2018, a CAGR of 13% per annum, according to Ethio Telecom’s 2019 annual report.