300 illegal telecom operators lurking in the country
New telecom proclamation in the making
The state-owned telecom monopoly, Ethio Telecom, on Thursday announced that more than 300 illegal telecom operators are providing telecom services by intercepting Ethio Telecom infrastructure.
Briefing reporters at her office, CEO of Ethio Telecom, Frehiwot Tamru, disclosed that the country is full of SIM boxes that illegal operators use to intercept international incoming calls and relay them to local customers charging international telecom firms cheap prices for the service. Even though the country’s telecom proclamation allows only Ethio Telecom to provide telecom services, individuals are illegally importing VSAT and SIM boxes to provide illegal telecom services in the country. “There are few illegal VSATS but most of the illegal operators use SIM boxes that can accommodate more than 1,000 SIM cards,” Frehiwot said.
According to the CEO, individuals use fake ID cards to buy SIM cards from Ethio Telecom. “Some come up with 10-15 ID cards to buy SIM cards.”
Frehiwot said that Ethio Telecom has procured a new device that enables it to track the illegal telecom operators. “We have identified 300 illegal operators in Addis Ababa and various regional towns. Most of the SIM boxes are owned by the same individuals. When we chase them out of Jimma they move to Dire Dawa,” she said. “We have noted that there are companies and individuals who are illegally accumulating wealth and they are threats to the national security of the country,” she said.
Frehiwot said that in collaboration with law enforcement forces Ethio Telecom is tracing and taking legal actions on the illegal telecom operators.
The illegal telecom operation is costing Ethio Telecom direly. The company’s earnings from international call termination services has been dwindling in the past years. “Our revenue in foreign currency from termination service has been falling in the past seven years. It used to account to 20 percent of our revenue but this has come down to only five percent,” Frehiwot said.
On average, each month, customers make 4.7 million international calls out of Ethiopia while Ethio Telecom on average receives 23 million international calls monthly. “Ethio Telecom is losing a huge sum of foreign currency due to the illegal telecom operation. The illegal telecom operators use the infrastructure in which the Ethiopian government invested heavily. It is not only Ethio Telecom which is affected by the illegal telecom operation but the country in general is not getting the foreign currency it was supposed to get from this telecom operation,” Frehiwot said.
Various reasons are cited for the mushrooming illegal telecom operation. Ethio Telecom termination fee is higher than most countries charge. International telecom companies complain that Ethio Telecom charges exorbitant rates for incoming international calls adding that they prefer to use the illegal telecom operators. Ethiopian diaspora said that they use calling cards to make calls home and it is expensive to make calls to Ethiopia than other countries.
Frehiwot defends Ethio Telecom’s position. “It is not only Ethio Telecom which is responsible for the growing illegal telecom operation. The SIM boxes are imported through various means. So Security Forces, the Ministry of Revenues and other relevant legal bodies did not discharge their responsibility properly,” she said.
Frehiwot said that Ethio Telecom did not give due attention to the international operation. “It was supposed to offer competitive prices. If you look at our tariff rate, it was adjusted in the beginning of 2013 and we did not make price revision in the last six years but the telecom sector is dynamic. Our termination rate was not also competitive. And Ethio Telecom was not properly following up the illegal telecom operation. It was only recently that we bought the monitoring system that enables us to trace the illegal telecom operation.”
However, chasing the illegal operators does not seem to be a lasting solution. Customers told The Reporter that the state telecom monopoly has to make tarrif revisions and offer competitive prices. Frehiwot accepts the comment. The CEO said her new management has conceded to the idea of becoming competitive. Accordingly, Ethio Telecom revised its termination rate recently and has seen a significant improvement in its earnings.
“We introduced a new rate effective November 2018 and we have seen encouraging results.” Ethio Telecom used to receive 500,000 minutes on average on a daily basis. After the termination rate adjustment, it is receiving 800,000 minutes. The amount of incoming international calls have increased by 40 percent after the termination rate adjustment. “We are planning to boost the revenue from international operation by 60 percent,” Frehiwot said.
The United States, Middle East, Europe and South Africa are parts of the world where majority of international calls to Ethiopia originate. Accordingly, Ethio Telecom has incorporated a new division dubbed International Business that works to grow the international business. The division head reports to the CEO. Ethio Telecom on Thursday announced that it has made a tarrif reduction on international calls raging from 10-40 percent. It also made 51 percent reduction on international SMS rate.
Frehiwot disclosed that Ethio Telecom has 800 million birr uncollected telecom service bills. Individuals, and corporate customers owe broad band internet, fixed line and mobile phone service arrears worth 800 million birr. “We are looking at the matter. We are investigating the cause of the problem,” she said.
In addition to the illegal telecom operation new telecommunication technologies such as What is up and Viber have significantly reduced Ethio Telcom’s revenue from international services.
In related news Ethio Telecom has started recycling 18 million mobile phone SIM cards as of yesterday. According to Frehiwot calls have not been made using these lines in the last two to seven years. “Mobile phone lines are scare resource that we have to use properly. We pay license fees for the lines. So have started recycling these utilised Sim cards.”
With regards to the planned partial privatisation of Ethio Telecom Frehiwot said that the pre privatization work is being carried out. Ministry of Finance and Economic Cooperation is the responsible government organ for the partial privatization Etho Telecom. “It is the Ministry of Finance who is coordinating the work but Ethio Telecom is actively engaging in the process. We believe that we need to have a strong a strong regulatory organ before privatising Ethio Telecom. We do not believe that there is a capable telecom regulatory organ. The regulatory organ should have the technology, know how, and finance required to properly regulate the sector,” Frehiwot said.
“To ensure a successful telecom transformation process we need to have a strong capable regulatory body. Privatization without having a regulatory organ might pose a threat,” Frehiwot said.
According to her, the government is drafting a new telecom proclamation. “We read some news reports that claim that company x is going to take over Ethio Telecom. That is not true. We have not arrived at such point. The government’s plan is not to disband Ethio Telcom and bring and new operator. The government invested heavily on Ethio Telecom. This is a public property. The government wants to transform Ethio Telecom into a competitive and successful company that renders efficient telecom service to the public,” she concludes.