Telcos eye Ethiopia’s mobile market
- Published on 22 June 2012
MTN and Vodacom have expressed strong interest in breaking into what could become one of Africa's biggest mobile markets.
Ethiopia may be one of the strictest telecoms markets on earth, after it last month criminalised Skype. But that is not stopping large mobile operators from communicating their desire to setup business there.
According to the World Bank, the East African country has an estimated population of 82 million, making it the third largest country in Africa after Egypt and Nigeria.
However, Ethiopia only has 16.8 million mobile subscribers and a mobile penetration rate of 18.9%, according to Informa Telecoms & Media research.
The reason for the country’s low mobile take-up is due to the fact that state-owned operator, the Ethiopian Telecommunications Corporation (Ethio-Telecom), is the only organisation allowed to deliver telco services in the country.
And Ethio-Telcom’s monopoly grip has allegedly become increasingly paranoid too, as Reporters Without Borders has accused the telco of using a technology called Deep Packet Inspection (DPI) to snoop on Ethiopians’ private emails, and other internet communications.
The East African country’s government, ruled by Ethiopian People's Revolutionary Democratic Front (EPRDF), on May 24 also introduced legislation that made the use of Skype, Google Talk and other Voice over Internet Protocol (VoIP) services illegal.
Those caught using internet call services face hefty fines and even up to 15 years in prison.
Yet despite the authoritarian and limited nature of Ethiopia’s telecoms market, large mobile companies such as MTN and Vodacom have indicated that they are keen on entering that country’s market.
MTN already has an office in Ethiopia in Addis Ababa with one person working there, according to Johnny Aucamp, general manager of strategic relations and business development Africa at MTN Business.
The South African company, though, is not allowed to have a mobile licence in Ethiopia. But MTN Business - which has offerings such as networking of company branches (MPLS Network) and software as a service applications for companies - does have a Value Added Service (VAS) licence that allows it to carry out its work in that country.
Aucamp was not willing to comment on whether a presence of MTN Business in the country could be a strategy on the part of MTN to attempt to potentially roll out a mobile network in Ethiopia.
But he did stress the attractiveness of that market, especially as it slowly appears to be opening up its market.
“I think for any for any provider, and I wouldn’t leave it alone for just MTN, any provider would give their eye-teeth to get a presence in there,” Aucamp told ITWeb Africa.
“I see a country that is on the verge now, depending on how the steps and the phases are approached, of exploding into a powerhouse on the East Coast.
“It’s probably the last-standing major country that you want to get a presence as it stands at the moment,” he said.
Another South African telco, Vodacom, has also expressed its interest in Ethiopia, citing its large population as a major pull factor.
“The country that everyone is finding mouth watering is probably Ethiopia,” said Vodacom Lesotho managing director, Malik Melamu.
“I think for us and for other companies in Africa like Airtel, MTN; one of the most attractive markets in Africa is probably Ethiopia,” he said.
Getting into Ethiopia’s telco market, though, will be tough.
France Telecom currently has a managed services two-year contract with Ethio-Telecom. And if France Telecom helps Ethio-Telecom to achieve good growth, that that could postpone the opening up of the market in that country, says Danson Njue, an analyst with Informa Telecoms & Media.
As a result of this, it could be premature to suggest that the market could open up any time soon.
“I think the government is not yet ready to liberalise the market - I don’t think they are ready for any competitor for now,” said Njue.
However, if the market does open up, Njue says Telcos would show strong interest in operating in the country.
“We are quite sure that among the biggest operators in Africa, that is Vodacome and MTN ... they’ll be fighting it out,” said Njue.