Tuesday, April 23, 2024
BusinessEthio telecom plots aggressive expansion amid privatization, new competitors

Ethio telecom plots aggressive expansion amid privatization, new competitors

After posting its best results yet, state giant ethio telecom is launching an ambitious growth push just as sweeping reforms loom, including partial privatization and tougher competition.

Ethio telecom, which monopolized Ethiopia’s telecom sector for over a century, saw its first major rival last year with the entry of Safaricom, an experienced African operator.

The road ahead gets rockier. Yet, Frehiwot remains undaunted and is unveiling bold targets for the 2023/4 financial year in line with ethio telecom’s three-year strategic plan.

The CEO hopes an aggressive expansion drive will help ethio telecom navigate the reforms reshaping Ethiopia’s telecom landscape, including the partial privatization that will dramatically intensify competition.

The telecom giant closed the 2022/3  fiscal year with annual revenue of 75.8 billion birr, making it the second-highest revenue-generating state-owned enterprise after Ethiopian Airlines. For the new year ahead, the operator plans to generate 90.5 billion birr in revenue, a rise of over 19 percent. This will come from expanding its customer base by six million to reach 78 million clients by year’s end.

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Frehiwot aims to increase its 33.2 million mobile broadband subscribers by 24 percent to 41.2 million. The company will grow its 69.5 million mobile voice clients by just 7.5 percent.

Last year was phenomenal for one of ethio telecom’s products, Telebirr. Operating in full swing, Telebirr managed to enroll 34.3 million subscribers in its first two years. During the 2022/3 fiscal year, which just ended last June, it had facilitated 679 billion birr in transactions, contributing one percent of the telco’s total revenue.

Ethio telecom aims to grow Telebirr subscribers to 44.1 million by the end of June 2024, a 28.6 percent increase. This growth, along with a 50 percent rise in merchants and a 16 percent increase in agents accepting Telebirr payments, is expected to boost the platform’s revenues.

Safaricom’s M-Pesa is also gearing up to launch in Ethiopia after securing its operating license last May. Company officials say the service rollout is planned for September. With over 16 years of experience in Kenya, M-Pesa is anticipated to pose stiff competition for Telebirr in Ethiopia.

Frehiwot acknowledges that her company will face significant competition.

“One of the major assumptions in our yearly plan is a competitive market environment,” she said, pointing to a potential third operator joining Ethiopia’s telecom sector.

“The Ethiopian Communication Authority [ECA] is in the process of ensuring that a third operator will join the market. Our plan for the year is prepared in consideration of this third competitor as well as the mobile money service of our existing competitor,” Frehiwot added.

Ethio telecom plans to add 988 new mobile sites this year, including 140 in rural areas, expanding its network to 9,078 sites. The company aspires to build capacity to serve up to 92 million wireless subscribers and cover 440 towns with 4G networks.

Firehiwot plans to expand Telebirr’s digital financial services by signing up additional banks beyond Dashen Bank and the Commercial Bank of Ethiopia to widen the platform’s reach.

Onboarding more banks is a priority on Firehiwot’s agenda for scaling up Telebirr. She also plans to roll out new features like group bill sharing, school fee payments by parents, and revamping the digital lottery options on Telebirr to revamp its mobile money system.

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