Ethiopia has long been considered the last untapped African market for many telecommunications players. This is because the country has a single mobile telecoms operator, Ethiotel, which is state-controlled and enjoys a monopoly.But Prime Minister, Abiy Ahmed, who was once hailed for his commitment to opening up the Ethiopian economy decided to invite new players into the telecoms space. Ethiopia is a large market, with a population of 112 million and a Gross Domestic Product (GDP) of $96 billion. The country knows how big an opportunity it is offering to telecoms companies and has taken its sweet time with the process. In all, 12 telcos including Safaricom, MTN, Orange, Saudi Telecom, Telecom SA, Liquid Telecom, Snail Telecom, Etisalat among others expressed interest.
We now know that the Ethiopian Communications Authority (ECA) has shortlisted six of those twelve telcos for the next stage of the process. The six companies will need to submit their technical offers by April 5, 2021.
While the ECA has not disclosed the names of the six shortlisted companies, Safaricom has said in a press release which is making the rounds that it made the cut. It remains to be seen when an official release by the ECA reveals the five other companies in the mix.
Although it’s an interesting opportunity for whoever wins the two telecom licences on offer, the Ethiopian market is not without its challenges. Top of that list of hurdles is the government’s penchant for shutting down the internet.
Internet cuts won’t dissuade telcos
Ethiopia has a history of using internet shutdowns to silence dissent and opposition; this has happened more than twelve times. In July 2020, the government shut the internet down for eight days after the murder of Hachalu Hundessa, a musician and activist who was a popular figure in Ethiopia.
As an analyst told Reuters in 2019; “It (the shutdown) will reaffirm to investors that there’s considerable unpredictability to the economic, political, and security environment in Ethiopia, but these hopefully short-term problems are unlikely to significantly discourage their interest in the long-term market opportunities.”
It is especially important given that telcos in Africa are seeing a trend of reduced revenues from voice as data is becoming more important. One easy example of this trend can be seen in Airtel’s recent financial report which showed that data revenue is up 24.4%.
If frequent internet cuts disrupt revenues, why aren’t the telcos bothered? The thinking may be that it is unlikely that the internet is out for stretches that are long enough to affect revenue. It could also be that in the grand scheme of things, the sheer size of the market will even things out anyway.
While that is up in the air, one thing is certain; Ethiotel has some competition coming soon and it will be interesting to see how that impacts the telecoms sector.