The telecommunications industry in Ethiopia, Africa’s second most populous country, was under the control of Ethio Telecom until the end of last year. For the country’s nearly 30 million Internet users – just 25% of the total population – this dominance meant poor communication with high costs and substandard support services. In 2022, the Ethiopian government opened up the market to private telecommunications companies around the world, and less than six months later, local entrepreneurs have begun to see the benefits of this change.
In October 2022, Kenya’s major telecommunications company Safaricom launched services in Ethiopia as part of a consortium that includes Vodafone, Vodacom, Sumitomo Corporation, and British International Investment. The consortium paid $850 million in license fees to operate in Ethiopia and has plans to invest another $8 billion over the next decade, making this the largest single foreign investment in the country.
Five business owners and many industry experts told it The Whole World that Safaricom’s entry not only gave them a choice between two competing players but also forced the incumbent Ethio Telecom to improve its services and pricing.
Alamin Yasin, director at Technolab Digital Service, a group of companies providing digital products and services, said The Whole World now you can subscribe to unlimited mobile internet from Ethio Telecom for 999 birr (about $19) per month. Three years ago, unlimited mobile internet would have cost him about $100 a month.
“Even before the opening of the sector, the incumbent must continue his game,” said Ethiopian businessman and investor Addis Alemayehou. The Whole World. “They should improve their service, lower their prices, improve their customer service.” For the country’s startups, poor connectivity and high internet costs have been two major challenges, Alemayehou said. “Monopoly is never good for business.” “Liberty is long overdue,” said Sossina Tafari, a communications expert based in Ethiopia. The Whole World. “Being competitive in the Ethiopian environment, given the population, is absolutely necessary if growth is to be expected.”
Safaricom has rolled out “one of the most modern networks in the world in Ethiopia,” said Anwar Soussa, CEO of Safaricom Ethiopia. The Whole World. “Once you start rolling out 4G in small towns, I think that’s going to be a game changer for a lot of people, consumers and businesses.”
Safaricom now has 2.5 million subscribers in Ethiopia and covers 27 cities, according to Abhinav Sinha, managing director and head of technology and telecommunications at British International Investment, which is part of the Safaricom consortium.
Some business owners told The Whole World they believe that Safaricom has not met all their needs yet. For example, the company does not offer an unlimited data package. “Safaricom is not close to providing what businesses need, but their entry into the market enables Ethio Telecom to provide a better service,” Ibrahim Ghazali, founder and managing director of Yegara Host, one of Ethiopia’s leading startups, told us. The Whole World. Safaricom’s pricing strategy is to be in line with Ethio Telecom even at a lower fee, according to the company’s CEO, Peter Ndegwa.
The Ethiopian government has delayed approving Safaricom’s launch of its M-Pesa mobile money transfer system, which has been a huge success across East Africa. The government wants the telecoms consortium to pay a license fee of fifteen billion. “We are ready to launch now,” said Sinha of British International Investment. “The software is ready. The servers are fine. And once we get clarity on that, we’ll start. We won’t be the first (mobile money service), but we hope to be better.”
Meanwhile, Ethio Telecom has been running its own mobile money service, Telebirr, since 2021. Although it counts 27.2 million users, the actual number of active users is difficult to estimate as some only sign up for the free 15 birr offered on registration, according to the report. Atnafu Brane, founder and program director at the Center for the Advancement of Rights and Democracy.
Brian said The Whole World He is worried about the future of independent players in the Ethiopian telecommunications sector because of the corruption in the country. “The world is not compatible with business,” Brhane said. “Even getting a business license is a big hassle, and corruption has gotten out of control in the last one (or) two years. You will not get any kind of service unless you give money to certain officials in the government.”
Ethiopia’s government has repeatedly shut down the internet during periods of political unrest, and the conflict-ridden region of Tigray has experienced the world’s longest blackout. Internet shutdowns cost the Ethiopian economy an estimated $8.3 million a day, according to the Center for Advancement of Rights and Democracy.
“About three or four years ago, (the startup community) had to pack up and move to Kenya or Dubai to continue operating. It’s been a long time since we did that, so that’s a good sign,” Alemayehou said.
The government plans to announce its choice of a third telecommunications company this year. It is also reportedly looking to sell 45% of its shares in Ethio Telecom, which currently has approximately 70 million customers.