Wednesday, June 12, 2024
BusinessEthio Telecom CEO's comments on rural access spark feud with regulator

Ethio Telecom CEO’s comments on rural access spark feud with regulator

 – Frehiwot argues the telecom regulator should fund universal access in uneconomic areas, citing costs

– However, regulators maintain telecom companies bear the responsibility due to their universal access obligations

The state-owned ethio telecom and the Ethiopian Communications Authority (ECA) are at odds over who should bear the cost of expanding telecom infrastructure to unprofitable rural areas.

Ethio telecom CEO Frehiwot Tamiru has irked regulators by stating telecom firms should not have to provide universal access in uneconomic locations, arguing it is the duty of the ECA.

The ECA, Ethiopia’s telecommunications regulator, disputes Frehiwot’s comments, emphasizing that telecommunications companies have mandatory responsibilities to provide universal access.

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During a press conference presenting ethio telecom’s annual performance, Frehiwot was asked by journalists about the company’s reach in rural areas.

She replied, “The ECA must fund expansion from the Universal Access Fund for Telecommunications Infrastructure in rural areas.” During a similar presentation to lawmakers a month ago, when delivering the nine-month report, she made remarks similar in substance.

The Universal Access Fund aims to improve telecommunications access in underserved rural Ethiopia. The Fund is managed by the ECA and financed by contributions from telecommunications companies. Its primary objective is to provide affordable services to unconnected areas.

When pressed further about ethio telecom’s performance in providing rural services as a public enterprise, Frehiwot reiterated that since Ethiopia’s telecom market has been liberalized, ECA has had a key role in regulating competition.

“The multidimensional universal access responsibility should be given to the regulatory body,” she said.

Frehiwot’s comments have angered regulators who point to ethio telecom’s universal access obligations.

The director of Ethiopia’s telecom regulator has hit back at ethio telecom’s CEO over her claims that expanding rural connectivity should not be the responsibility of telecom companies.

Balcha Reba, director of the Ethiopian Communications Authority (ECA), told The Reporter that Frehiwot’s comments were “misleading.”

He says the universal access funds that telecom firms pay should be used to expand infrastructure in uneconomical areas.

“We require collecting the funds from companies like ethio telecom and Safaricom, but we have given them a three-year grace period,” Balcha explained.

The ECA’s Universal Access and Service Framework Five-Year Plan from 2020 outlines the amounts and sources of income for the Fund and how it will be administered, via regulations from the Council of Ministers.

The Fund will primarily be financed through mandatory annual contributions from all licensed operators providing services in Ethiopia’s communications and information market segments. The Fund may also receive additional financing from other sources.

Both ethio telecom and Safaricom are required to contribute 1.5 percent of their revenue to the Fund, managed by the ECA. The Funds are intended to expand rural infrastructure and cover operators’ costs in underserved areas.

“The ECA must work to provide access in areas that lack the economic feasibility to acquire universal access funds,” says Frehiwot. “However, the ECA has yet to implement the mandatory contributions in Ethiopia,” she adds.

Balcha calls Frehiwot’s comment “unfair given the grace period and that the ECA has developed regulations and frameworks for administering the funds.”

Ethio telecom, which generated 75.8 billion birr in revenue last fiscal year, earned its income from only 48 percent of Base Transceiver Stations (BTS) located in feasible areas; the remaining 52 percent of BTS are in rural kebeles that are not economically feasible and require subsidies, according to Frehiwtot.

“We have fulfilled – and even exceeded – our responsibilities as outlined in the proclamation,” says the CEO. “However, now that Ethiopia’s telecom sector has opened up, the responsibility is not solely limited to ethio telecom.”

But Balcha wants more.

“Ethio telecom remains a state-owned entity and must operate in areas that lack feasibility to support government policy and serve the public,” says Balcha. “The company cannot escape its universal access responsibilities while making 75.8 billion birr in revenue annually.”

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