Ethiopia "the next big thing" for telcos, according to analysts
08 August 2018 | James Pearce
Ethiopia has been identified as one of the next big opportunities for telecoms operators looking at foreign investment, with the market set to open up in the coming years.
The African country currently only has one operator – state-owned Ethio Telecom – which has over 62 million mobile subscriptions. But this is set to change, according to analysts GlobalData.
The Ethiopian government has said it will look to offload around a 30-40% stake in Ethio Telecom, as well as splitting the company in two, with stakes set to be made available to global investors.
The move, announced by Prime Minister Abiy Ahmed in June, is part of a wider programme of economic reforms which will also open up Ethiopian Airlines, Ethiopian Power, and the Maritime Transport and Logistics Corporation to outside investment.
Reports also claim that the government will look at granting new licences to operators, which could open up the market significantly. GlobalData forecasts claim mobile subscriptions in Ethiopia could rise from 62 million this year to over 100 million in 2023.
This process has already started to some degree. Ethiopia is one of the few African states to still have a state-owned monopoly in the telecoms space, although Ethio Telecom did open up to local partners in May by allowing some to provide internet services through its infrastructure.
A number of operators have already been linked to a potential move into the African country. Vietnamese telco Viettel has enquired about a potential investment into Ethio Telecom, according to reports.
“If the Ethiopian government offers the clear and sensitive option for selling of Ethio Telecom’s shares, Viettel will still thoroughly consider this option if it is suitable with Viettel’s investment strategies,” a spokesperson for Viettel told Reuters.
Operators with an existing African presence, such as MTN, Safaricom, and Orange have also been linked to moves in Ethiopia.
Safaricom is reportedly looking at partnering with Ethio Telecom to launch its M-Pesa payment services in the country. Last year, it acquired a 260-kilometre stretch of fibre cable between Marsabit in Kenya and the border town of Moyale from Mauritius-based Bandwidth and Cloud Services, giving it an infrastructure presence on the border with Ethiopia.
“If confirmed, this is an important positive for Safaricom, and would offer an important upside on M-Pesa revenue growth numbers based on the number of subscribers it registers in the 100 million market,” Standard Investment Bank said in a research note, as reported by The East African.
“The upside could be higher depending on the negotiated revenue share – but unlikely to be substantially more than 15 per cent of revenue (unless the uptake is low).”
MTN and Vodacom are two other telecoms groups with a significant African footprint who have also shown an interest in investing in Ethio Telecom, according to several reports.
Jonathan Bachrach, telecoms analyst at GlobalData, said: “Ethiopia offers a large subscriber base which has been uncontested and has significant growth potential. Our forecasts indicate the country could add circa 30 million subscribers over the next five years, with the total number of mobile subscriptions rising from 71.2 million in 2018 to 101.1 million in 2023.”
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