Ethio Telecom launches mobile money ahead of rivals getting licences

Frehiwot Tamiru mobile money launch.jpg

Ethio Telecom has gained a head start against its likely competitors by launching its mobile money service this week.

Mobile money was likely to be central to at least the Vodafone-Vodacom-Safaricom bid for one of Ethiopia’s two new telecoms licences. MTN also bid by the deadline in late April.

CEO Frehiwot Tamiru (pictured in an ETV news item about the launch) and Ethiopia’s prime minister Abiy Ahmed announced the service, called TeleBirr Mobile Money, this week.

The prime minister said at the ceremony: “We launched TeleBirr Mobile Money service withstanding international pressure,” though he did not elaborate on what the pressure was.

He said that the service is intended to strengthen Ethio Telecom to emerge as a competitor in the international market.

Safaricom, part of the Vodafone consortium bidding for one of the licences with US and UK government finance, is Africa’s most successful provider of mobile money, with its M-Pesa, which was launched in 2007. Since then the Vodacom group has expanded M-Pesa to other countries in sub-Saharan Africa.

The Ethiopian government is considering the licence applications from MTN and the Vodafone group but has not announced a decision. The MTN bid is backed by Chinese finance.

Frehiwot and Abiy confirmed that Chinese vendor Huawei has supplied the technology for Ethio Telecom’s TeleBirr. “I would like to thank our partner Huawei for finishing this project in such short time,” said Frehiwot.

Huawei said its mobile money platform can process up to 100 transactions a second, a rate that it can scale up to 1,000. Users will be able to use smartphones or earlier generations of phones.

Huawei said that it “delivered the end-to-end solution for Ethio Telecom within five months by constructing the data centre, configuring hardware and software, benchmarking top global telecom project delivery efficiency”.

Until just a few weeks ago the government of Ethiopia was insisting that new telecoms operators should use Ethio Telecom’s then-unannounced mobile money service in their offerings. But Bloomberg reported last week that the government had stepped back from that rule, as well as rule that new operators should use Ethio Telecom’s fibre and towers.

Huawei said operators in 19 countries are using its mobile money system, with 152 million users.  Curiously, Huawei provides the platform for Safaricom’s M-Pesa in Kenya, following a migration from the original system in 2015.

However, it is unclear whether the Vodafone-Safaricom-Vodacom group, if it wins a licence, will be able to use Huawei: substantial funding for the bid comes from the US government’s International Development Finance Corporation (IFC), which has given a loan of $500 million, and the UK-backed CDC.

Ethio Telecom is projecting that up to 53 million Ethiopians — out of a total population of 110 million — will use its mobile money service, which will be available in five languages.