ICT Investment Opportunities in Ethiopia

  • ID: 1213969
  • Report
  • Region: Ethiopia
  • 37 Pages
  • Technology Strategies International
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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 are indications that the Ethiopian government will finally start to liberalise the telecommunications sector, and 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.

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.

In this report we provide a comprehensive analysis of propsects for investment in ICTs in Ethiopia. Forecasts are provided for mobile, fixed and internet usage. Investment opportunities are identified.
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Executive Summary

Introduction
Background
Objectives of the Study
Research Methodology
A Note on Forecasts
Currency
Acknowledgements

Investment Opportunities in the ICT Sector in Ethiopia
Rationale for selecting Ethiopia
Overview
ICT's in Ethiopia
The Fixed Line Market
The Mobile Market
Internet
Challenges in Ethiopian ICT Markets

Profile: Ethiopian Telecommunications Corporation (ETC)

Regulatory Context and Prognosis
Telecommunications Regulation in Ethiopia
Licensing Framework
Prospects for Liberalisation of the Market

Investment Environment
Foreign Investment
Banking Sector
Private Equity

Investment Prospects
Market Growth Prospects and Forecast
Investment Opportunities in the Fixed Line Network
Investment in the Mobile Network
Internet Service Providers
Other Investment Opportunities
Investment in Ethiopia in Perspective

Appendix 1: Key Contacts

List of Figures
Ethiopia: Real Annual GDP Growth Rate
Ethiopia: Consumer Price Inflation Rate
Teledensity in Africa (Ethiopia)
Ethiopia: Fixed Lines in Services (2000 – 2009)
Ethiopia: Mobile Subscribers (2000 – 2009)
Ethiopia: Internet Users (2000 – 2009)
Ethiopia: Fixed Line Forecast (2000 – 2014)
Ethiopia: Mobile Subscriber Forecast (2000 – 2014)
Ethiopia: Internet Subscriber and User Forecast (2000 – 2014)

List of Tables
Ethiopia: Key Statistics
ICT Usage in Ethiopia (mid-2009 estimates)
Ethiopian Telecommunications Corporation: Facts and Figures (FY2008/9)
Ethiopian Financial Institutions
Investment Companies and Funds Active in Ethiopia and Sub-Saharan Africa
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The Ethiopian telecommunications liberalization agenda sets framework for growth and investment

The telecommunications market in Ethiopia is on the verge of massive growth, leading to a wide range of investment opportunities in telecommunications and downstream information and communications technology (ICT) segments, according to a new study published by Technology Strategies International in partnership with BroadGroup TMT Ventures. The report, titled “Investment Opportunities in the ICT Sector in Ethiopia: 2010”, predicts that by 2011 the state-owned incumbent, the Ethiopian Telecommunications Corporation (ETC) will have a privatisation timetable in place, and that liberalisation of the mobile market will take place shortly after that.

“The Ethiopian Government recognizes that the country is being left behind in terms of digital inclusion, and urgently needs to address this if it wants to reap the benefits that other African countries have demonstrated from embracing ICTs,” notes Christie Christelis, President of Technology Strategies International. “It may also become an important political issue in the next elections.”

While the Ethiopian Government is on record saying that it will not hasten the liberalization process, and will not succumb to pressure from the international community to liberalize its banking and telecommunications sectors in order to accede to the WTO, Christelis believes that there is neither any reason for, nor any benefit from delaying the process further.

“Liberalization of the telecommunications environment will create a raft of ICT investment opportunities in Ethiopia,” Christelis says. “The Chinese have already recognized the potential of Ethiopia and are building an electronics manufacturing facility to address the high growth expected in demand for handsets and accessories. They are also providing supplier financing in certain telecommunications investments in order to address the shortage of domestic capital.”

The report predicts that over the next five years the number of mobile subscribers in Ethiopia will grow at an annual rate of 43% (CAGR), to reach almost 20 million subscribers by 2014.

Christelis says that Ethiopia will provide a range of excellent investment opportunities for foreign investors interested in the ICT sector, but warns that the window will not be open indefinitely. He predicts that the next four years will be critical in shaping the Ethiopian ICT sector's future and will provide high return opportunities for foreign investors that have the risk tolerance, and ability, to capitalize on the coming surge in ICT-related markets.

The 37 page report provides a comprehensive review, analysis and forecast of investment opportunities in the ICT sector in Ethiopia. It analyses the investment environment in Ethiopia and in identifies key providers of capital. It highlights growth segments in the Ethiopian telecommunications market in the context of important developments in the economy and in the political environment. Detailed forecasts are presented for fixed line communications, mobile communications and internet usage. Specific investment opportunities are identified and categorized in terms of scale of investment.
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