Ethio Telecom Ponders Split as Reform

The government is considering a significant structural reform on the telecom giant, Ethio telecom, that may see the state-owned enterprise split into two – where one would oversee service provision, and the other will deal with infrastructure which may result in the privatisation of some parts of the telecom.

Ethio telecom and the Ministry of Communication & Information Technology (MCIT) began the process of hiring a consultant to undertake a study four months ago, according to Debretsion GebreMichael (PhD), the minister of Communications & Technology now vice president of the Tigray Regional State with the rank of a president).

“The telecom has finalised its preparations to carry out the study and is only a step away to pick the right company,” Andualem Admase (PhD), Ethio-telecom’s CEO told Fortune, adding that the selection of the consulting firm will be announced by the end of the current Ethiopian fiscal year.

The last and most significant reform came at the beginning of the decade, when the government signed an agreement with an overseas company, France Telecom, to takeover the Enterprise’s management. Worth an estimated 30 million dollars, the contract lasted only a couple of years.

“For such a dynamic sector, eight years is a long time,” said Andualem, who is also overseeing another expansion project that will see the state enterprise partnering with private players.

Just over a couple of weeks ago, 11 local companies passed a preliminary technical evaluation for the right to partner with the telecom to open 94 retail shops in 89 towns across the country. This will increase the number of its service centres from 214, all which have recently been equipped with electronic payment systems. The partnership will move the operation of the telecom’s existing and new service centres to the bidders using the brand.

“We were able to attain most of the listed targets set by the GTPII, and now we want to analyse the current status of the telecom and take it to the next level,” Debretsion told Fortune.

Indeed, there have been milestones achieved by Ethio telecom such as the 62 million mobile subscribers it currently boasts from what was just a little over 38 million at the beginning of the GTP II in 2014/15. But the number is still shy of the targeted 103.6 million subscribers.

The study is also expected to complement the government’s plan to expand outside Ethiopian borders, with the telecom having already been connected via fibre optics with its neighbours, and having penetrated the markets of countries such as South Sudan and Djibouti, according to Debretsion.

The law on the establishment of Ethio-telecom does allow it to have a branch office elsewhere while having headquarters in Addis Abeba.

Befekadu Zeleke (PhD), an associate professor at Addis Abeba University (AAU), and adviser on the research paper ‘Analysis of Organisational Change Management Practices at Ethio telecom’, believes that the study is an excellent start to achieve the government’s vision for the telecom.

“Structural changes may be implemented through merging similar departments or splitting larger ones,” he said, adding that changing the employees’ attitude against the established vision and the work culture and improving the institution’s capacity are better ways of going about it.


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