Ethiopia’s liberalized telecom sector offers opportunity, with glitches.

Original Story Published by: Morris Kiruga, www.theafricareport.com
Photo Source: Reuters/Maggie Fick

(Above) State provider Ethio Telecom is likely to split into two entities.

Ethiopia’s parliament passed a law to liberalise the telecommunications sector on 13 June, even as the country endured a week-long internet blackout.

The law, dubbed the Communication Regulatory Proclamation, repealed several pre-existing ones on which the country’s state-owned telecoms monopoly, Ethio Telecom, was built. It sets the legal framework for a new telecoms regulatory authority that will issue licenses to private investors. The new law also says that ownership of telecoms companies “shall be open without limitation to private investors including both domestic investors and foreign investors”.

The future for Ethio Telecom

Ethio Telecom, which briefly surpassed MTN Nigeria to become the continent’s largest telecom service provider by subscriber numbers in 2017, will most likely be split into two. The telco is one of Ethiopia’s “commanding heights”: state-owned enterprises that Prime Minister Abiy Ahmed is seeking to privatize either fully or partially.

• The government has previously made it clear that it would maintain a majority stake in Ethio Telecom and an effective control of the board. With the new law, the regulatory authority can also issue licences for new players to enter the market.

Another likely route for Ethio Telecom, which the country has already tried before, is to sell part of the telco and pledge to maintain its monopoly for a period of time. Between 2016 and 2017, a Japanese tobacco conglomerate bought a controlling share in Ethiopia’s state-owned tobacco company for almost $1bn, an overvaluation justified by the inclusion of a 10-year monopoly.