Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Digital Inclusion

Ethiopia's telecoms liberalization is critical for digitization report

Article Image
The liberalization of Ethiopia's telecoms market is crucial for the country to achieve its digitization ambitions, according to a new report from emerging market digital infrastructure and services consultancy, HIP Consult.

The report, Ethiopia's Digital Dawn: ICT Infrastructure & Reforms as Enablers of Transformation, suggests that the planned opening up of the country's telecom monopoly will go a long way to improve the affordability, coverage and quality of Internet and mobile services in the East African nation.

"With the state-owned Ethio Telecom as the sole provider of fixed and mobile Internet, as well as the owner and operator of the majority of fiber networks and towers throughout the country, pricing has been essentially left unchecked by a regulator or market competition," the report said.

But this is all set to change as Ethiopia is in the midst of plans to open up the telecoms sector by privatizing state-owned Ethio Telecom and issuing two additional telecoms licenses by the end of 2020. The country has also established an independent communications regulator, the Ethiopian Communications Authority (ECA), to support the promotion of a competitive market in the country.

Ethiopia is one of the last countries in the world with a complete monopoly over telecoms services. HIP Consult said that countries that previously had a similar monopolistic structure were able to successfully improve the affordability, availability and quality of Internet services by privatizing their state-owned monopoly.

With a population of over 110 million, the Horn of Africa nation has one of the world's fastest-growing economies, making it an appealing market in which to offer mobile and fixed-line services.

All of the Africa's major operators are interested in getting one of the two licenses up for grabs. Econet, Orange, MTN, Etisalat, Vodacom and Safaricom have all expressed interest in expanding their African footprints into the country.

Growth potential
"As one of the largest and fastest-growing countries in Sub-Saharan Africa, Ethiopia has potential to become a leader in ICT. However, prominent infrastructure gaps are apparent when benchmarking regionally," HIP Consult said.

According to the country's 2025 Digital Strategy, released in June 2020, Internet coverage in Ethiopia has grown at an annual rate of 45% for mobile broadband, but active mobile broadband subscriptions are only 7.1% of the country, compared with the regional average of 24.8%.

Statistics from market research company, Omdia, show that at the end of 2019 Ethio Telecom had around 44 million subscribers, giving the country a mobile penetration rate of only 40%. Omdia's data shows that less than 2% of Ethiopia's mobile users are on 4G, with 90% of them still using 2G services.

Ethiopia's fiber market is also an interesting one. Despite over 33,000 kilometers of fiber collectively deployed by Ethio Telecom, Ethiopian Electric Power (EEP) and Ethiopian Railways Corporation (ERC), fiber networks reach only 37% of the population, according to HIP Consult.

"While a handful of Internet Service Providers (ISPs) have been established in Addis Ababa and other major cities, they are reliant on Ethio Telecom's infrastructure and are limited to service locations dictated by the incumbent. Outside of major urban areas, connectivity options are limited," it said.

"A critical factor in achieving Ethiopia's goals for economic growth, and for GDP in particular, is investment in new technologies and enabling ICT infrastructure to drive job creation and the development of digital skills and entrepreneurship," HIP Consult explained.

Unfortunately, the COVID-19 pandemic has proved challenging for the global economy and will have an even more significant effect on African economies. The World Bank projects that economic growth in Africa will decline from +2.4% to between -2.1% and -5.1% in 2020.

"Sub-Saharan Africa as a whole may experience negative economic spillover effects from the pandemic due to external dependencies and weak health infrastructure. Despite the economic downturn, COVID-19 has exacerbated the need for digitization, and shown that investment in ICT and digital transformation is more important than ever," it concluded.

Paula Gilbert, Editor, Connecting Africa

Innovation hub

Story

Africa can leverage GenAI for economic growth – Microsoft

A whitepaper on generative artificial intelligence (GenAI) and the future of work has found that the African continent, with its young population, can leverage AI to drive economic growth.

Registration opens for Africa Tech Festival 2024

Registration has opened for the 2024 edition of Africa Tech Festival, the continent's leading platform for technology innovators, specialists and thought leaders.

More Innovation hub

Latest video

More videos

Partner perspectives

All Partner Perspectives

Sponsored video

More videos

Follow us on X

Industry announcements

More Industry announcements

Upcoming events

Cyber Revolution Summit
August 9, 2024
Gaborone, Botswana
Africa Tech Festival 2024
November 11-14, 2024
Cape Town, South Africa
More Upcoming events

Africa Tech Perspectives

Story

Uber's Marjorie Saint-Lot on inclusion and sustainability in Africa

Uber's Country Manager for Ghana and Cote d'Ivoire, Marjorie Saint-Lot, shares how the ride-hailing company is approaching public-private partnerships, environmentally friendly initiatives and gender inclusion in Africa.

Story

The 100 most influential African leaders in 2023

A new report from Africa Tech Festival and Connecting Africa puts a spotlight on the top 100 African leaders in the telecoms and technology sector in 2023.

Story

Deep dive into East Africa's tech startup ecosystem

New survey reveals a lack of access to investors, reliance on international VCs and global recession trends as the biggest barriers for East African tech startups to access funds.

More Africa Tech perspectives

Guest Perspectives

Story

How e-mobility could transform Africa's transport sector

By Francis Hook

ICT analyst Francis Hook delves into Africa's e-mobility sector and unpacks the challenges faced locally and the benefits the move to electric vehicles could bring to urban transport systems.

Story

Omdia View: April 2024

By Omdia Analysts

April 2024's telecoms highlights in the Middle East and Africa included a license for Starlink in Ghana, new mobile termination rates in Ethiopia, and 6G trials in Bahrain – that and more in the latest Omdia View.

More Guest Perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up
Tag id test-002