But No Bonus
The European telecom giant France Telecom (Orange) contract was terminated without bonus payment.
The sole communications provider in Ethiopia, Ethio Telecom, which was managed by the European telecom firm for the past two and half years, is now back in the hands of Ethiopians.
The company that was selected from various international firms has concluded its contract with some success in relation to modernizing the operation and upgrading parts of the management.
According to Debre Tsion Gebremichael (PhD), Deputy Prime Minister and Minister of Information and Communication, France Telecom has achieved a score of 83 based on the balance score card. He said due to that fact, the company did not receive any additional payment as bonus, except for the initial amount that the two companies had agreed upon when the management contract commenced.
The company signed a 30 million euro contract with the deal including a bonus or penalty based on the effective performance of the company. The Deputy Prime Minister indicated that if the company had scored above 95 on the score card, it would have collected its bonus, and if it had registered below 75, it would have been penalized, according to the deal. “The company scored 83; therefore, it received what was stipulated in the contract, although some amount has been deducted, because they did not honour some parts of the agreement,” he explained, during a press conference held on January 2, 2013.
The main intent of the government to outsource the management of Ethio Telecom to a foreign company was to modernize the sixty-year old public enterprise, which is one of the biggest state-owned employers.
The Ethiopian Telecommunication Corporation (ETC) was renamed Ethio Telecom (ET) when the government restructured the company in an effort to modernize it before the advent of France Telecom. The company also reduced its number of employees from a total of 12,600 to 8,600 when the foreign company took over the reins of the management.
Debre Tsion said that the modernization process had taken two and half years and included knowledge transfer to local employees.
He said that Orange had certainly contributed to the improvement in service and revenue, as well as in the application of international standards and practices.
“When key performance indicators were evaluated, they have registered success, but in terms of quality and capacity building we did not get what we were expecting,” the DPM stated.
“To implement the E-tom, which is the major international management practice, we had drafted 460 business process divisions and have already applied 402, while the rest will be implemented phase by phase,” he elaborated.
He confirmed that the voucher card sale had significantly developed under the management of Orange. “Currently, there are 39,000 retailers involved in voucher card sales, which is a big success and hadn’t been applied previously,” he added.
He also greatly appreciated the management or control mechanism of infrastructures throughout the country from a central location.
“In relation to the transformation and development of international best practices, the management had succeeded admirably, which was also expected from them,” he explained. “In general, we have got that we wanted, but that does not mean we got all what we expected,” he clarified.
Currently, nationwide mobile coverage has grown to 64 percent and the installation of wireless telephone connections, which basically focused on rural areas, has reached 73 percent of the total area of the country.
“Currently, we have a total of 21 million clients to which Ethio Telecom provides service, which is huge compared to the number of clients it had in the past, which was negligible by comparison,” the minister described. They were also able to restructure the company which was able sell its services to millions within a limited period which is quite an achievement or accomplishment and innovatively new for our country, he reiterated.
Presently, the number of mobile subscribers has reached 20 million from the previous 6.4 million users. This figure has made the country one of the leading mobile-user country in Sub-Sahara Africa.
The internet and data users have also reached 3.7 million.
The DPM indicated that 25 percent of the total population have got telecom access compare to 8 percent just two years ago.
In the past fiscal year the telecom giant registered 12 billion birr in profits, while in the first five months of this budget year, it has earned 7 billion birr.
According to the D.P Minister, credit transfer, which began under France Telecom management, has become the new source of revenue for ET, comprising of 13 percent of total earnings.
By the end of the five-year Growth and Transformation Plan (GTP), ET has planned to double the mobile subscription from the current 20 million to around 40 million. In order to do this, the corporation is in negotiations with two Chinese telecom firms, ZTE and Huawei, who won the bid for the new telecom infrastructure expansion.
ZTE, which undertook the previous 1.5 billion dollar expansion that ended about two years ago, will share the new contract with the other global giant, Huawei. The DPM informed Capital that, even though the two companies were selected, negotiations are not yet finalized. He said that the new expansion will cost up to USD 1.5 billion.
On a separate deal, two Orange officials, the CEO and deputy CEO, will stay on in their current capacity for the coming six months, to allow for a smooth transition period.