World Bank plans to invest US$200m to improve Ethiopia’s telecommunications, calls for fair competition

ETHIOPIA – The World Bank has announced plans to invest US$200 million in Ethiopia’s telecommunications industry but wants the country’s government to open this market up to competition.

Ousmane Dione, World Bank country director for Ethiopia, Sudan, South Sudan and Eritrea said the organisation will invest in Ethiopia’s digital economy and drive a new Digital Ethiopia Foundations project.

He said the project will provide funds to strengthen the regulator, Ethiopia Communications Authority, and to prepare the legal and regulatory building blocks for the digital ecosystem.

Part of the plan is to pre-purchase capacity from Ethio Telecom and new operators, through competitive bidding, Dione added.

However, the World Bank has also expressed concern over a decision by the government to limit investment by independent cellular tower companies.

The financial institution argues that the decision compels telecommunication companies to use infrastructure provided by Ethio Telecom, and restricts infrastructure roll out – particularly in rural areas.

It advised that new entrants be allowed to negotiate commercial arrangements and decide to either build their own infrastructure or purchase capacity from Ethio Telecom.

Dione warned that policies which seek to protect Ethio Telecom’s infrastructure by allowing it to charge high prices for interconnections will end up harming the company.

“Ethiopians will benefit greatly from the opening up of the telecom market and Ethiopians firms will be better able to compete internationally if they pay lower prices for digital services at home”

Ousmane Dione – World Bank Country Director, Ethiopia

He said Ethio Telecom will need to both collaborate and compete with the new entrants who will be the telco’s biggest customers if prices are set fairly, and that Ethio Telecom has the potential to become a regional powerhouse – but only if it is well-prepared for the competitive environment.

“Ethiopians will benefit greatly from the opening up of the telecom market and Ethiopians firms will be better able to compete internationally if they pay lower prices for digital services at home. But to benefit fully from competition does not mean offering preferential treatment to Ethio Telecom but rather creating a level playing field on which it can compete fairly with its new rivals,” said Dione.

The Ethiopian Communications Authority is yet to announce the winners of the two telecommunication licences.

MTN-the largest mobile phone operator in the continent and the Vodafone/Vodacom consortium including Kenya’s largest telecom provider, Safaricom bid for the licences.

The government is expected to raise US$1 billion in revenue from the two 15-year licences.

Ethiopia has a population of over 100 million people making it Africa’s second most populous nation after Nigeria and an appropriate market for mobile and fixed-line services.

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