Ethio Telecom to be divided into services and infrastructure companies

19 June 2019 | Alan Burkitt-Gray

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Ethiopia is to split its monopoly telecoms operator, Ethio Telecom, into a network company and a services company before the two units are privatised.

State-controlled Fana Broadcasting quoted finance minister Ahmed Shide outlining for the first time how Ethio Telecom will be split.

The government, led by prime minister Abiy Ahmed since April 2018, announced last year that Ethio Telecom would be split in two before privatisation, but this is the first time any minister has outlined the process. Previously it was widely assumed that the split would be on regional lines.

The plan follows along the lines already pioneered by a number of countries: Telecom New Zealand split into Chorus, an infrastructure company, and Spark, a services company. Australia’s NBN provides infrastructure that Telstra, Optus and others use. Telecom Italia – TIM – has repeatedly examined a functional split. Openreach, though still owned by BT, provides local infrastructure to all UK service providers.

The announcement comes days after Ethiopia said that it will invite tenders for new telecoms licences in September this year and hopes to award new licences before the end of 2019.

It is not clear whether these new licensees will have wholesale access to the infrastructure company that will be carved out of the current monopoly operator, whose CEO, female IT entrepreneur Frehiwot Tamiru, was appointed by the government in July 2018.

At the same time the government has not said whether the national fibre network, announced by minister of innovation and technology Getahun Mekuria in January, will be part of the Ethio Telecom infrastructure company.

Companies that have stated their interest in the Ethiopian market include MTN and Orange as well as Vodafone, which owns Safaricom, the biggest operator in neighbouring Kenya. However, others are likely to emerge over the course of the year – either as bidders for one of the new licences or as investors in one of the companies into which Ethio Telecom will be split.