A recent report by the Africa Telecom 50 Report 2024 (East Africa) published by REVENUE Magazine gave us major insights into the Ethiopian telecom market. As expected, the report identified Ethiopia as the largest telecom market in East Africa, with 86.6 million mobile subscriptions – representing 27.49 percent of the region’s subscriptions in 2024.
There is a catch though.
The report put a limelight on Ethiopia’s huge telecom infrastructure gap. In terms of teledensity, Ethiopia is ranked seventh out of the twelve countries in the region with a percentage of only 65.58 percent.
The news article states, “On average, …more telephones are available to people, per capita, in Seychelles, Kenya, Tanzania, Rwanda, Comoros and Uganda during the period under review than to people in Ethiopia. Compared to the other big East African telecom markets of Tanzania and Kenya, with a teledensity of 117.6 and 126.4 percent, respectively, Ethiopia has plenty of catching up to do in this critical telecom metric.”
In working out this math, the report says Ethiopia will require about 68,000,000 more mobile subscriptions in order to catch up with Tanzania’s teledensity as of today. As for Kenya, it would require about 81,000,000 extra mobile subscriptions.
If we consider towers alone, we will be struck with the unflinching truth that our telecom infrastructure is way behind that of our neighbors. A report for quarter 3 of 2023 by TowerXchange states that Nigeria had 39,467 towers while South Africa had 24,903, as Ethiopia follows with 10,200, and Kenya and Tanzania follow with 9,766 and 7,992 respectively. Nigeria’s nearly 40,000 towers serve its 228 million people at the time; South Africa had nearly 25,000 towers serving 63 million people; Kenya’s nearly 10,000 towers serve its 55 million population while Tanzania has 8,000 towers serving 67 million people. In comparison, Ethiopia’s over 10,000 towers serve 129 million people – more than double the number of people than Kenya, for the same number of towers! These are other figures that depict Ethiopia’s low teledensity.
One thing these figures clearly indicate is the huge telecom infrastructural gap in Ethiopia. Sector experts estimate that USD three to USD four billion would be required to address the gap. Both Safaricom Ethiopia and Ethio telecom contribute money through the Universal Access Fund to ensure the expansion of infrastructure and telecom services to less populated areas of the country. However, there is mutual understanding that the funds raised are nowhere near the amount required to create tangible results on the ground.
Currently, the Ethiopian telecom market is considered to be one of the cheapest around the world. Although low prices are advantageous for people who are already using the services, they make it difficult for operators to invest in the expansion of their services to less populated areas, weighing down on their abilities to ensure universal accessibility across the country.
Low telecom service prices go along with the sustainability of the current low teledensity ratio; accordingly, Ethiopians who live in urban centers will keep getting the services cheaply, while the penetration rate into rural areas will remain super slow. Introducing subsidies to rural telecom infrastructure expansion ventures can help a bit but it doesn’t provide operators with the motivations needed to treat rural expansion as a viable business.
Establishing an effective business model that enables sustainable investment in universal access to telecom services could be a major step toward solving the problem for good. That might mean striking a balance between being cheap and ensuring a better profitability for operators. Despite popular concerns, therefore, price rationalization could be the bitter pill to swallow.
The writer is an expert in the telecommunications sector.
Contributed by Anonymous
