New Reports
Synopsis: Ethiopia
Ethiopia has the lowest overall teledensity in Africa. The population is approaching 90 million, but there are less than 1 million fixed lines in service, and a little more than 3.3 million mobile subscribers. The number of internet users is dismal – below 500,000 at the end of 2009. Communications service provision is reserved for the Ethiopian Telecommunications Corporation (ETC), one of the few monopoly providers left on the African continent.
There is widespread recognition in government that Ethiopia is being left behind even its African counterparts. This has provided the stimulus for the Ethiopian government to re-evaluate its protectionist policies, or face further marginalization. The vision of its newly crafted national ICT strategy is to use ICTs as an accelerator for development. Consequently, there are indications that the Ethiopian government will finally start to liberalise the telecommunications sector, and indeed, it has already appointed a French partner – on a revenue sharing basis – to assist with the management and technical operations of the incumbent ETC. Liberalisation will create a substantial set of investment opportunities in the ICT sector. It is expected that the liberalisation agenda will include allowing competition into the mobile segment. Key uncertainties are the timing and scale of liberalisation that will take place, but it is widely recognised that before the country sees any of the benefits
widespread communications access, it will need to allow the private sector to take a prominent role in developing the market. And there are no homegrown companies that could effectively take the lead. BSNL, MTN, Orascom, British Telecom, Malaysia Telkom, France Telecom and Zain have shown strong interest in the Ethiopian market – some of whom were particularly interested in taking the role as strategic investment partner to ETC. France Telecoms has been selected as ETC’s revenue sharing partner. Those international mobile operators that have demonstrated interest are likely to make investments if the government allows them in, and if the environment is not overly restrictive.
By 2014 the number of fixed line subscribers in Ethiopia is expected to increase to 4.4 million, representing an annual average growth rate of 38% p.a. The number of mobile subscribers is expected to grow at 43% per year over the period, reaching almost 20 million by 2014. Even at these high growth levels the overall teledensity will be less than 25% in 2014, indicating that the market will be nowhere near saturation. The number of internet users will jump to 12 million, but internet subscribers will still be low at 1.4 million at the end of 2014. Ethiopia presents an opportunity for investors to reap vast returns as the liberalisation agenda gets underway.
TABLE OF CONTENTS: Investment Opportunities in the ICT Sector in Ethiopia: 2010
EXECUTIVE SUMMARY I
INTRODUCTION 1
BACKGROUND 1
OBJECTIVES OF THE STUDY 2
RESEARCH METHODOLOGY 3
A NOTE ON FORECASTS 3
CURRENCY 4
ACKNOWLEDGEMENTS 4
INVESTMENT OPPORTUNITIES IN THE ICT SECTOR IN ETHIOPIA 6
RATIONALE FOR SELECTING ETHIOPIA 7
OVERVIEW 7
ICT’S IN ETHIOPIA 11
THE FIXED LINE MARKET 12
THE MOBILE MARKET 14
INTERNET 16
CHALLENGES IN ETHIOPIAN ICT MARKETS 18
PROFILE: ETHIOPIAN TELECOMMUNICATIONS CORPORATION (ETC) 19
REGULATORY CONTEXT AND PROGNOSIS 21
TELECOMMUNICATIONS REGULATION IN ETHIOPIA 21
LICENSING FRAMEWORK 22
PROSPECTS FOR LIBERALISATION OF THE MARKET 23
INVESTMENT ENVIRONMENT 25
FOREIGN INVESTMENT 25
BANKING SECTOR 29
PRIVATE EQUITY 30
INVESTMENT PROSPECTS 32
MARKET GROWTH PROSPECTS AND FORECAST 32
INVESTMENT OPPORTUNITIES IN THE FIXED LINE NETWORK 35
INVESTMENT IN THE MOBILE NETWORK 35
INTERNET SERVICE PROVIDERS 36
OTHER INVESTMENT OPPORTUNITIES 36
INVESTMENT IN ETHIOPIA IN PERSPECTIVE 37
APPENDIX 1: KEY CONTACTS A-1
© BroadGroup/TMT Ventures and Technology Strategies International 10
LIST OF FIGURES
ETHIOPIA
ETHIOPIA: REAL ANNUAL GDP GROWTH RATE 8
ETHIOPIA: CONSUMER PRICE INFLATION RATE 9
TELEDENSITY IN AFRICA (ETHIOPIA) 12
ETHIOPIA: FIXED LINES IN SERVICES (2000 – 2009) 13
ETHIOPIA: MOBILE SUBSCRIBERS (2000 – 2009) 15
ETHIOPIA: INTERNET USERS (2000 – 2009) 17
ETHIOPIA: FIXED LINE FORECAST (2000 – 2014) 33
ETHIOPIA: MOBILE SUBSCRIBER FORECAST (2000 – 2014) 34
ETHIOPIA: INTERNET SUBSCRIBER AND USER FORECAST (2000 – 2014) 34
LIST OF TABLES
ETHIOPIA
ETHIOPIA: KEY STATISTICS 7
ICT USAGE IN ETHIOPIA (MID-2009 ESTIMATES) 11
ETHIOPIAN TELECOMMUNICATIONS CORPORATION: FACTS AND FIGURES (FY2008/9) 20
ETHIOPIAN FINANCIAL INSTITUTIONS 29
INVESTMENT COMPANIES AND FUNDS ACTIVE IN ETHIOPIA AND SUB-SAHARAN AFRICA 31
© BroadGroup/TMT Ventures and Technology Strategies International 9
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