Ethiopia opens telecommunications sector to limited competition

Companies that have signed agreements with Ethio Telecom have just been created to register for this new activity.

Ethiopia's telecoms monopoly agreed to allow some local companies to provide Internet services through its infrastructure, a move that is seen as stimulating competition and expanding the data market, officials said.

Ethio Telecom has more than 16 million Internet subscribers in the country of more than 100 million people. They generated more than 27.7 billion Birr (USD 1 billion) in revenue in the first nine months of 2017/18, 70 percent of which come from mobile services and 18 percent from the Internet.

"Our goal to sign contracts for virtual Internet service providers (VISP) is to increase subscriptions," said Abdurahim Ahmed,  company's head of communications.

"There may be price cuts, there will be competition between them, this is the central idea," he told Reuters.

Abdurahim said that eight companies have signed up to now to provide the services, which include several Internet packages. He added that foreign companies could not provide services. Ethiopia is one of the few African countries that still has a state monopoly on telecommunications.

Companies that have signed agreements with Ethio Telecom have just been created to register for this new activity or were previously doing other business.

Addis Ababa ruled out the liberalization of the telecommunications sector and said the revenue generated was spent on infrastructure projects, such as railways. Abdurahim said the decision to allow private companies to sell services was not a harbinger of complete liberalization of the sector.

The low penetration of the Internet and the poor quality of service in Ethiopia are often an obstacle for companies and, for the most part, are seen as a barrier to new technology companies like those in neighboring Kenya. Ethiopia maintains strict control in several other industries, with foreign companies also excluded from the banking and retail sectors.

(With inputs from Reuters)