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Ethiopia has long been the big exception to the wave of telecoms market liberalization that has swept across Africa.
Ethiopia's telecoms market remains in the hands of a monopoly – the state-owned Ethio Telecom – and that has held back the growth and development of the sector, with mobile subscription penetration in Ethiopia coming in at 56% at the end of 2017, some way below the average for Africa of 81%.
Ethiopia has a population of about 103 million, making it the second most populous country in Africa after Nigeria – and with Ethiopia's telecoms market being less developed than the average for the continent, there is clearly a market opportunity that could be addressed.
Ethiopia's government has previously rejected the idea of liberalizing the country's telecoms sector, but this month it unveiled a dramatic shift in policy. At the beginning of June, the executive committee of the EPRDF, Ethiopia's ruling coalition, announced that several economic sectors and state-owned enterprises – including Ethio Telecom – will be opened up to local and foreign investors.
Although details of the planned liberalization remain hazy, the moves announced so far have attracted the interest of major operators, including MTN, which has been preparing for the possibility of change in Ethiopia's telecoms market for some time. In 2013, MTN obtained a value-added services license in Ethiopia and set up an office in the Ethiopian capital, Addis Ababa. MTN has said that it is excited about the new prospect of the Ethiopian market opening up, because Ethiopia would be a natural fit with MTN's pan-African footprint.
"MTN has long held the view that Ethiopia really does offer great opportunities for growth," said MTN spokeswoman Jacqui O'Sullivan in an interview with the BBC's World Service. "It's an enormous country [and] there is a large population to be served. And we have always felt that we have something to offer for both the people of Ethiopia and the businesses that serve them." O'Sullivan cited MTN's Mobile Money service as an application that could be relevant to Ethiopia.
Vodacom has also maintained an office in Ethiopia since 2013 and has reportedly confirmed its interest in the country's telecoms market too. France's Orange might also have an interest in the new opportunities in Ethiopia because, for a time, Orange ran Ethio Telecom under a management contract.
However, the Ethiopian authorities have said that the government will retain the majority of shares in Ethio Telecom, and the prospect of a minority holding in Ethio Telecom might be of limited appeal to investors. Additionally, there seems to be no plan to license new network operators.
The Ethiopian government's new commitment to privatization represents an important step, but prospective investors in Ethiopia's telecoms sector will need more details about what is on offer, and they will probably be hoping for wider liberalization than has been indicated so far.
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