Ethio Telecom misses revenue targets as Safaricom waits to pounce

Frehiwot Tamiru Ethio Telecom CEO.jpg

Ethio Telecom failed to reach its revenue target in the last half-year before it faces competition from Safaricom.

The company achieved only 86.4% of its target in the last half of 2021, though that was 6.7% up on the same period of 2020, Ethio Telecom said.

The actual revenue was 28 billion birr (US$565 million), said CEO Frehiwot Tamiru (pictured) in a news conference.

Revenue from international business was $74.8 million, 89.3% of the target she had set.

“In addition to expanding our revenue stream, our company has devised cost optimisation strategy and managed to save over 1.2 billion birr [$24.2 million] in the six months,” she said.

“Our total subscribers reached 60.8 million, achieving 100% of the subscriber base target and an increase of 20% from the previous budget year similar period. Mobile voice subscribers reached 58.7 million, data and internet users 23.8 million, fixed services 923,000 and fixed broadband subscribers reached 443,000. Telecom density has reached 58.5%.”

Ethiopia has a population of 115 million, a figure that gives a huge opportunity for Safaricom, which is gearing up to offer Ethio Telecom’s first competition ever.

Safaricom Ethiopia is 55.7% owned by Safaricom Kenya and 6.2% owned by Vodacom. Both Safaricom Kenya and Vodacom are part of the global Vodafone group. Other shareholders are Sumitomo with 27.2% and the UK government’s CDC group, with 10.9%. 

Ethio Telecom has been spared the arrival of a third operator in the underserved market. In September 2021 the regulator, the Ethiopian Communications Authority (ECA) called for proposals for a new licensee, but over the Christmas and New Year holidays the ECA cancelled plans, referring to “concerns and requests from several prospective bidders to delay the process”.

The main factor for Ethio Telecom’s under-performance, though, is the continuing civil war in the Tigray region. Apart from anything else, that means the company has 3,473 base stations out of operation, “resulting in a revenue loss of 3.67 billion birr” ($74 million).

“The restoration in those areas where recovery was possible cost us 328.9 million birr, but there are still many woredas [districts] remaining including Tigray region where we cannot provide our services and nor can the conditions and status of our telecom infrastructures be known.”

Frehiwot said she “would like to extend our sincere apologies to our customers who are suffering from service outage due to the security challenges”. She said: “We will promptly do the necessary work of restoration as soon as the security situations improves.”

One of the main areas of competition between Ethio Telecom and Safaricom will be mobile money, which Safaricom pioneered in Kenya under the M-Pesa brand, now owned by Safaricom and Vodacom.

Ethio Telecom has used the imminence of competition to introduce its own telebirr service, which now has over 13 million subscribers, said Frehiwot. The total value of telebirr transactions so far is 5.1 billion birr, equivalent to $103 million – rather less than $1 per head of population.