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April 18, 2024
PI Global Investments

Ethio Telecom posts 14% rise in 1H as financial services drive growth 

The telco’s Telebirr service proves popular as the telco shrugs off foreign investment hurdles for now

State-owned telco Ethio Telecom posted a 14% rise in 1H profit driven by growth in its mobile phone-based financial service Telebirr. EBITDA rose to ETB 19.77 bn ($352 million) while revenue grew by 26% to ETB 42.86bn.  

The operator said the Telebirr service has achieved 104% of its target by attracting over 41m customers – out of 74.6m total subscribers – in the first half of the budget year. The services transaction value reached ETB 910.7 billion in the six months of the fiscal year, while transacting ETB 1.7 trillion throughout the economy since its launch, according to CEO Frehiwot Tamiru (above).  

Last month, Ethio Telecom launched a Telebirr-based Digital Financial Marketplace that enables banks, microfinance, insurance and other institutions to use the platform and easily make their financial products accessible and inclusive to their customers at large. The marketplace includes share buying and selling processes and supports microfinance services, including micro credit, saving and insurance services for financial institutions. The telco has already entered to discussions with Ahadu Bank, Siinqee Bank, Enat Bank and Awash Bank to join the platform and approval from the National Bank is “expected soon”.  

Tamiru credited the successful half to: “providing affordable new and enhanced products and services, along with various mobile financial and digital offerings.” This included expanding its 4G network to 340 towns and cities and comes despite competitor Safaricom entering the Ethiopian market.    

The CEO added the 26% revenue increase marks a significant improvement from the same period last year, despite operational challenges like service disruptions due to security issues, power outages, vandalism of critical infrastructure and foreign currency shortfalls. 

Hurry up and wait 

Ethiopia’s telecoms industry, serving a population of around 120m, was considered a big prize in Prime Minister Abiy Ahmed’s push to liberalise the economy after he took over in 2018. In 2021, he opened up Ethiopia’s telecom industry to foreign players, approving new licenses to improve service quality, availability and affordability. 

However, the country’s recurring security problems, legislative changes and concern about the government’s commitment to opening up its tightly controlled economy have deterred investors. Although Safaricom launched commercial mobile network services in October 2022 after winning the country’s first private telecoms licence, the regulator still has not sorted out the licence for a third national operator despite the process kicking off in 2021. 

Meanwhile the government has flirted tirelessly with attracting foreign investment in Ethio Telecom saying it would offer a 45% stake to foreign investors last year, up from the 40% it said it would offer in November 2022. It was enough for Orange which last November said it had decided to withdraw from buying a stake of up to 45% in Ethio Telecom.  

At the time Orange said: “After analysis, the group believes the conditions do not allow for the rapid deployment of our strategy and the completion of a project that would create value for the company.” The withdrawal pretty much left UAE’s E& as the potential frontrunner – if the divestment happens.  

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