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BusinessEthio Telecom slashes broadband tariffs, upgrades internet speed

Ethio Telecom slashes broadband tariffs, upgrades internet speed

Set to declare its worth, valuation of the company

After a year and a half since huge discount measures were taken in a bid to reduce tariffs on telecom services, the state monopoly, Ethio Telecom, has made additional reductions in broadband internet tariffs with upgrades on its speed.

The operator has unveiled tariff cuts reducing it up to 72 percent for enterprise VPN service users, while a 69 percent reduction has been made for residential fixed broadband internet users and a 65 percent reduction for enterprise fixed broadband customers.

Most importantly, internet speed has been upgraded. The 512 kilobytes per second (kbps) minimum internet speed limit has been lifted and residential customers will have access to 1 megabytes per second (Mbps) only for 499 birr against the previous 978 birr paid for half of the internet speed per month. There are 42,700 residential broadband internet customers. If one wishes to use 2Mbps speed, will be required to pay 699 birr reduced from the previous 1768 birr. With that, the speed for fixed broadband internet has been upgraded to three times faster than the current speed.

Frehiwot Tamiru, CEO of Ethio Telecom told The Reporter that such adjustments will create an upsurge in the number of customers, with 60,000 new additions in the coming four months. Currently, the provider has managed to attract some 132,000 broadband internet customers in less than two years. The overall coverage, according to Frehiwot, is expected to expand to 50 million subscribers by the end of this year, with a five million new telecom users joining. 

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Frehiwot has said the adjusted tariffs will not cause in reduction of revenues. The considerations for this round of internet tariff reduction and speed upgrades, is associated with the overall perception the telecom sector plays in the economy. Frehiwot said the intention behind the tariff measure is to bring about a 1.4 percent change in the GDP; with a 10 percent corresponding changes to telecom services penetration.

Not so long ago, after assuming her current leadership role with Ethio Telecom, Frehiwot declared several tariff reductions on some of its mobile and internet packages including voice and data services, to reach as high as 80 percent. Currently, Addis Ababa and major cities of the country are enjoying the use of 4G LTE services.

However, the expensiveness of telecom devices has overshadowed the reduction in tariffs. Out of the 45 million subscribers, 5.5 million can afford smart phones and only 1.5 million users have advanced devices that can support the service in Ethiopia. To make prices of telecom devices affordable, Ethio Telecom has initiated a credit arrangement for suppliers, so that mobile phones, personal computers, modems and the like could be available in retail markets.

In related news, the telecom operator said the total worth and asset valuation of the company will soon be made public, once KPMG, the transaction adviser, finalizes the job for which it will be paid close to USD one million. The CEO underlined that the asset valuation has nothing to do with the ongoing privatization or liberalization initiatives.

During the first half of the current Ethiopian fiscal year, Ethio Telecom has managed to amass 22.4 billion birr in revenues and targets to achieve its goal of 45 billion birr by the end of this fiscal year.

In order to upgrade and deploy the broadband internet expansion, the operator has invested some 748 million birr and paid USD 12.4 million for ZTE, a Chinese telecom company. It is to be recalled that ZTE, had secured a USD 1.5 billion expansion project. ZTE again was involved in the second phase of the telecom expansion that brought Huawei, another Chinese firm to share USD 1.6 billion, each receiving half of the contract. 

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