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Bracing for competition
Frehiwot Tamru, CEO of Ethio Telecom

Bracing for competition

Ethio Telecom projects 55 billion birr revenue

The national telecom company, Ethio Telecom, has projected to generate a total revenue of 55.5 billion birr in the 2020-2021 budget year.

Ethio Telecom’s management has unveiled a revised three year growth strategy and business plan for the 2020-2021 fiscal year. Briefing reporters on the business strategy on Wednesday at Hyatt Regency Hotel Frehiwot Tamru, CEO of Ethio Telecom, disclosed that the three year business strategy dubbed “BRIDGE” which was launched last year has been revised to cope up with the dynamic business environment. Frehiwot said the business strategy intended to serve as a bridge that takes Ethio Telecom to the next path. The three year business strategy covers the period from July 2020 to June 2021.  

Ethio Telecom plans to increase its revenue by 16.4 percent from 47.7 billion birr to 55.5 billion birr in the 2020-2021 budget year. The company targets to garner 157 million dollars revenue from international services. Frehiwot said the international telecom service including roaming has been adversely affected by the COVID-19 impacts. However, she said the company planned to increase its foreign currency earnings by 6.3 percent in spite of the threats paused by COVID-19 pandemic. The company earned 147.7 million USD from international services in the 2019-2020 budget year.

Ethio Telecom plans to increase the number of total subscribers by 13 percent from 46.2 million to 52.12 million. The number of mobile subscribers is projected to increase from 44.5 million to 49.7 million, and data and internet from 23.58 million to 27.47 million. The demand for fixed line phone is dropping but Ethio Telecom is determined reverse the trend in the 2021 and plans to increase the number of fixed subscribers from 980,000 to 1.09 million.

Ethio Telecom has set an ambitious target of increasing the number of broadband internet subscribers by a whopping 215.3 percent from 212, 200 to 669,400. In the 2019-2020 budget year the company’s broadband subscribers surged by 135 percent to 212,200. Frehiwot attributed the dramatic growth of the board band internet subscribers’ number to the tariff reduction and the removal of entry barriers made by Ethio Telecom. She also pointed out that people are forced to work from home due to the COVID-19 pandemic and this has contributed to the fast growth of demand for broadband internet service.

Over all Ethio Telecom plans to generate the country’s tele density from the current 46.1 percent to 51.3 in the new budget year.

According to Frehiwot, Ethio Telecom would undertake various expansion projects in the capital Addis Ababa as well as regional states. The company would expand the 4G advanced service in Addis Ababa and introduce the 4G network in regional towns.

Ethio Telecom has availed the LTE 4G network in every nook and corner of Addis Ababa and 4G advanced in selected areas. The traffic on 4G network has increased by a staggering 200 percent. Last year Ethio Telecom planned to build 4G network in regional towns but failed to undertake the projects due to various reasons.

Frehiwot said the company would realise the project this year. The company plans to boost network capacity and coverage. The company projects to build 842 new sites in Addis Ababa and the regional states. Out of which 150 would be built in Addis Ababa. The expansion projects would be undertaken by in-house capacity, according to the CEO.

Frehiwot said Ethio telecom would undertake expansion projects in the rural areas as well. “In the past as a public enterprise Ethio Telecom has been expanding telecom infrastructure in every part of the country without looking at the economic viability of the projects. But now as we are bracing for competition we have to look at the economic viability of the expansion projects. The new operators are investors who come here to make profit so they will focus on the economic zones. Ethio Telecom will undertake expansion projects in rural areas through the universal access program. The regulator has to ensure that all operators are addressing the rural market,” Frehiwot said. “We will undertake expansion projects in rural areas but we need to discuss that with the regulator,” she added. Operators are expected to benefit from universal access fund when they develop telecom infrastructure in rural areas.

Ethio Telecom subsidises the rural sites with the revenue it generate from the lucrative urban market. “It is important for us to maintain our market in the cities in order to be able to continue providing telecom services in rural areas,” Frehiwot said.    

According to Frehiwot, the three year growth strategy was crafted considering various factors. She said the country’s economic growth, the demand of customers, the international trend of the global telecom industry, the adverse impacts of COVID-19 and the competition coming from the new entrants were thoroughly assessed and incorporated in the business strategy.

Frehiwot said Ethio Telecom is preparing itself for competition. “We are working to become the proffered operator. We want to be the most preferred operator by our customers, business partners and employees. Ethio Telecom is people oriented company. We want to retain our staff and attract professionals from outside of the company. We want to make Ethio Telecom a company that people want to work for,” Frehiwot said.

As part of the national telecom reform program the Ethiopian government is under preparation to liberalise the telecom market. The government has outlined a national policy that would end the 126 year state monopoly of Ethio Telecom by allowing foreign telecom firms to join the market. 

The Ethiopian Communication Authority (ECA), the regular organ of the telecom sector, will license two telecom operators by the end of this year. The authority has disclosed its plan to float bid to select two telecom operators in September and award the licenses by December. Ernest & Young is consulting the authority on the biding process.   

The Ministry of Finance, the architect of the national telecom reform program, is working to partially privatise Ethio Telecom. The ministry is planning to privatise 40 percent stake of Ethio Telecom. The ministry is currently working on the privatization process. Deloitte is consulting the ministry on bid process.   

“If the two new operators are licensed by December we expect them to join the market by the fourth quarter. We considered the impacts on our market. We have analysed the market and incorporated it in our business plan. When the telecom market is liberalised there will be a challenge for the existing operator to retain its market share and secure new market. But we are working hard to be the preferred operator and ensure the growth and profitability of the company in the years to come,” Frehiwot said.

Frehiwot said the telecom liberalisation will pause not only threat but it will also bring business opportunities. Ethio telecom is under preparation to lease its vast telecom infrastructure to the new operators. “We can lease our mobile towers and fiber cables and generate significant revenue. If the new entrants will lease our infrastructure they will have an advantage on the time to market factor,” Frehiwot said.

In related news Ethio Telecom has made significant discounts on various services. It has made 35 percent discount on mobile data package and 29 percent on mobile voice package. It also made a 61 percent discount on telecom service via satellite via satellite (VSAT). The company has unveiled a number of new and revamped services including new mobile app-My Ethiotel-, Ethio e-care web portal and mobile package credit services.