July 29, 2022

Ethio Telecom says security instability in the nation hindered its revenue plans

City: Addis AbabaTechNews

It’s also revealed that Telebirr planned to achieve a 66 billion ETB transaction in the fiscal year but only reached 30.3 billion ETB

Avatar: Ilyas Kifle
By Ilyas Kifle

Ilyas is a reporter at Addis Zeybe experienced in creative writing and content production.

Ethio Telecom says security instability in the nation hindered its revenue plans
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Credit: Addis Zeybe (Frehiwot Tamiru, Ethio Telecom CEO)

Ethio telecom announced obtaining a revenue of 61.3 billion ETB and 146.6 million USD in the fiscal year of 2021-22, despite 3,473 mobile sites affected by security destabilization.

Ethio telecom issued its annual report covering the one-year performance period from 01 July 2021 to 30 June 2022, the Ethiopian fiscal year. 

The telecom operator’s total collected revenue accounts for 87.6 percent of the target and shows an 8.5 percent increment from the past budget year, while the operator achieved 82.3 percent of the target on generating foreign currency.

“Had it not been for the crisis in the North region as well as in some other parts of the country which have resulted in service outages in 3,473 sites, the targets would have been met,” the annual report reads.

Among the stated major challenges Ethio telecom faced during the fiscal year is the conflict in the North region as well as in some other parts of the country resulting in service outage, infrastructure damage, compromised project execution, supply chain, increasing operational costs, and revenue impacts, according to the report. Moreover, fiber and copper cable vandalism, commercial power acquisition delay, and power interruption were the other mentioned drawbacks. 

“Woldiya, Dessie, Kombolcha (areas which were under the control of TPLF for months during the conflict with the federal government) were areas with highest income calls from abroad that resulted in the dropping of both foreign currency and national revenue,” said Frehiwot Tamiru, CEO of Ethio telecom.

She added that the assessment of the infrastructural damages is undergoing as there are places beyond the company’s reach. “As an example, as we are not reaching the Tigray region, we don’t know about the current situation of our infrastructures and assets. Without including such areas, Ethio Telecom will not announce the status of whole sustained damages but analysis and estimated costs are done about the cases in the reachable areas.” 

Ethio telecom, so far restored 2,329 sites that were affected by security challenges in the budget year.  According to the CEO, among the 7622 mobile sites, 52 percent are subsidized by the company and only 48 percent of them are generating income.

Asked about Ethio Telecom’s readiness for the market competition with Safaricom Ethiopia, the new telecom operator which is expected to start operation in a few weeks, Frehiwot said, “Ethio telecom does not have a special preparedness for the competition with the new service provider. Our aim is to build a telecom provider with a range of services and make it a national revenue generator along with participating in cross-border works.”

Commencing on a microfinance service was one of the plans for the budget year. However, though the National Bank of Ethiopia granted the license to start it, it’s stated that Ethio Telecom is still waiting for additional measures from the regulatory bodies.

Devaluation on Birr is another impediment cited to affect Ethio Telecom’s expenditure. The CEO said “as most of the infrastructures bought and services provided are using foreign currency, the devaluation happens to be challenging. But despite the fact that we would be expected to raise service costs, Ethio Telecom is lowering tariffs realizing that our customers are also impacted by the economic crisis.”

In addition to the mentioned challenges, Ethio telecom indicated that it is practicing a cost minimization strategy called ‘Do2save’ and improving cost negotiation before paying for infrastructures.

“Our company has devised a cost optimization strategy (DO2SAVE) and managed to save over 5.4 billion ETB within the year,” Frehiwot Tamiru said.

Ethio Telecom’s total subscribers reached 66.59 million achieving 104% of the subscriber base target, among which mobile voice subscribers reached 64.5 million, data and internet users 26.1 million, fixed services 885.3 thousand, and fixed broadband subscribers reached 506.8 thousand. 

Ethio Telecom’s fintech app Telebirr planned to achieve a 66 billion ETB transaction in the fiscal year but reached 30.3 billion ETB. The report acclaimed that Telebirr has shown “tremendous growth” surpassing the industry’s trend by acquiring more than 21.8 Million subscribers within a short period of time.

In addition, the app’s integration with banks is completed enabling money transfer from bank to Telebirr in 13 banks and from Telebirr to bank in 11 banks. 974.3 thousand USD was remitted through Telebirr via an international remittance service partnering with 37 counties within the last six months.

The report disclosed that Ethio telecom is ranked 26th largest operator in the world among 778 operators and 2nd largest in Africa from 195 operators, next to MTN.