The Ethiopian Telecommunication Corporation (ETC) and France Telecom are expected to seal a deal for the latter to makeover Ethiopia’s lucrative state-owned sole telecom provider.
In the last fiscal year alone ETC pocketed a net profit of 2.4 billion birr amidst severe power cuts and the latest upgrading work is expected to generate record sales this year.
BSNL, a state-owned telecommunications company from India, and MTN Group, a South African multinational mobile telecommunications company operating in various African and Middle Eastern countries, were among the final three firms competing for the bid, according to sources. The final rundown, which the French company won, was between MTN Group and France’s biggest telecoms provider, the source added.
“We will sign the agreement with the firm that own the bid as soon as possible,” Amare Amsalu, ETC CEO, told Capital last Thursday, while refusing to confirm the name of the winning firm because the bid process had not been finalised.
ETC, which is nearing completion of massive expansion projects it has been undertaking with the Chinese ZTE company at a cost of 1.5 billion dollars, needs a transformation of how its main core processes are being operated, the CEO explained.
“There are various business models in the sector which we want to adopt by partnering with international experts that have reputable records,” Amare said, explaining why the tender was issued.
The corporation’s overall capacity is being massively boosted and needs a bigger market share to repay investment costs.
The corporation generated over 5.7 billion birr in revenues last year, surpassing the previous year’s revenues by a record 71 percent.
The increase was credited to over 2.2 million new customers the company added. A number that is also expected to significantly increase this year.
The power shortages that hit every economic sector also bled ETC’s coffers, including the costs of electric power generators at major substations. It was in spite of these problems that records profits were earned.
The number of mobile subscribers stood at four million at the end of 2008/09 fiscal year that ended in June, but Amare said his company’s current capacity can accommodate up to 20 million subscribers.
“The current capacity we have can only accommodate the demand for a two, three year period, but we need further expansion to meet demand after that. We expect the sector to grow alongside the booming national economy,” Amare said.
The wining firm, France Telecom, is expected to win ETC new sales with innovative market offers, but how the management takeover will be implemented is yet unclear and Amare said negotiations are underway about how best to divide responsibilities.
France Telecom is said to offer more expensive terms than the Indian counterpart BSNL, but triumphed on other criteria.
France had earlier ties with Ethiopian telecommunications industry when it assisted introduction of the technology back in 1903.