Ethio telecom, once the sole player in Ethiopia’s telecommunications sector, has defied expectations of decline following the industry’s liberalization. Despite the entrance of Safaricom PLC in October 2022, which marked the end of Ethio telecom’s monopoly, the state-owned enterprise has not only held its ground but also strengthened its position by embracing competition.
For over 130 years, Ethio telecom operated without significant rivals, making Safaricom’s arrival a critical turning point. Analysts had predicted a sharp decline in its revenue and market share, but Ethio telecom has proven resilient. CEO FrehiwotTamiru highlighted that rather than shrinking, the company adapted by modernizing its infrastructure, diversifying services, and contributing to Ethiopia’s digitalization goals.
Rather than retreating, Ethio telecom has come up with ambitious plans to diversify its services, modernize the infrastructure, and support the country’s broader digitalization goals. The company has also leveraged its extensive network infrastructure, accumulated over one and a quarter century, to maintain a strong foothold in the market. According to Frehiwot, the privatization of the telecom sector has forced the operator to embrace innovation and explore new opportunities. This shift is evident in the company’s financial performance, which paints a much brighter picture than initially predicted.
One of its most notable successes has been the expansion of financial services through Telebirr, a mobile money platform aimed at boosting financial inclusion. As of the 2023/24 fiscal year, Telebirr had attracted over 47.55 million users and facilitated transactions worth more than 2.55 trillion Birr, a significant achievement in a country with low digital and financial inclusion rates.
Ethio telecom’s overall financial performance reflects its strength, generating 93.7 billion Birr in revenue for the 2023/24 fiscal year, with a 23.3% profit margin-an impressive 47% increase from the previous year. This success is attributed to the company’s strategic planning and diverse offerings, allowing it to maintain profitability despite increased competition.
Frehiwot emphasized that Ethio telecom is a key player in Ethiopia’s digital transformation, offering over 270 products and services, many of which focus on digital solutions. As the government pushes for greater digitalization, Ethio telecom is aligning its services to meet national development goals, offering mobile payment solutions, digital services, and financial services like microcredit through Telebirr.
According to her, Ethio telecom is not just a service provider but also a key enabler of the country’s digital economy. By offering mobile-based financial services, the company is addressing some of the systemic challenges that have long hampered Ethiopia’s economic progress in particular in rural areas. Ethio telecom’s annual report indicated thatit has extended credit to over 2.92 million microcredit service users thereby boosting the financial inclusion aspiration.
Looking ahead, the CEO revealed ambitious plans for further expanding financial services and supporting startups, with the introduction of credit services for entrepreneurs without requiring collateral, a move aimed at fostering innovation and economic growth.
BY YESUF ENDRIS
THE ETHIOPIAN HERALD TUESDAY 10 SEPTEMBER 2024
