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How Ending the Government Monopoly Improved Ethiopia’s Internet


The telecommunications industry in Ethiopia, Africa’s second-most populous country, was a monopoly of the state-owned Ethio Telecom until late last year.

For the country’s nearly 30 million internet users — just 25% of the total population — this monopoly meant poor connectivity at high costs and low-quality support services. In 2022, the Ethiopian government opened the market to global private telecomms companies, and less than six months later, local entrepreneurs have already started seeing the benefits of this shift.

In October 2022, Kenyan telecomms giant Safaricom launched services in Ethiopia as part of a consortium including Vodafone, Vodacom, Sumitomo Corporation, and British International Investment. The consortium paid $850 million as a license fee to operate in Ethiopia and has plans to invest another $8 billion over the next decade, making this the single largest foreign direct investment in the country.

Five business owners and several industry experts told Rest of World that Safaricom’s entry has not only given them the option to choose between two competing players but also forced the incumbent Ethio Telecom to improve its services and pricing.

Alamin Yasin, a director at Technolab Digital Service, a group of companies providing digital products and services, told Rest of World he can now subscribe to unlimited mobile internet from Ethio Telecom for 999 birr (around $19) per month. Three years ago, unlimited mobile internet would cost him around $100 a month.

“Even before the opening up of the sector, the incumbent has to have their game on,” Ethiopian serial entrepreneur and investor Addis Alemayehou told Rest of World. “They have to improve their service, lower their prices, improve their customer service.” For the country’s startups, poor connectivity and high internet costs have been two major challenges, Alemayehou said. “A monopoly is never good for business.” “Liberalization is long overdue,” Sossina Tafari, a telecommunications expert focused on Ethiopia, told Rest of World. “Having competition in the Ethiopian space, given its population size, is really required if growth is expected.”

Safaricom has deployed “probably one of the most modern networks in the world in Ethiopia,” Anwar Soussa, CEO of Safaricom Ethiopia, told Rest of World. “Once you start putting 4G in small towns, I think that that’s what’s going to become a relative game-changer for a lot of people, consumers, and businesses.”

Safaricom now has 2.5 million subscribers in Ethiopia and covers 27 cities, according to Abhinav Sinha, managing director and head of technology and telecomms for British International Investment, which is part of the Safaricom consortium. 

Some business owners told Rest of World they believe Safaricom does not meet all their requirements yet. For instance, the company doesn’t offer an unlimited data package.“ Safaricom is nowhere near making offers that businesses need, but having them enter the market made Ethio Telecom offer better service,” Ibrahim Ghazali, founder and managing director of Yegara Host, one of Ethiopia’s most prominent startups, told Rest of World. Safaricom’s pricing strategy is to be in line with Ethio Telecom or at a slight premium, according to the company’s chief executive, Peter Ndegwa.

Source : Rest of World

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