Saturday, July 13, 2024

Tele starts paying off its debts after two years


CEO outlines steps for better service, revenue

For the first time since 2016, Ethio Telecom has paid its debts significantly and its revenue has covered 51 percent of its foreign exchange. They managed to pay USD 117.7 million over the past six months from their total loans of USD 1.29 billion to be paid until 2029.
The telecom monopoly has a USD 285 million loan which will mature this year and they are planning on using a higher foreign exchange contribution from their revenue this year to fully cover it.
“The maturing loan was higher this year because we had not been paying off on our loan for the past few years due to the national foreign exchange problem and our declining performance,” Frehiwot Tamiru, CEO of the telecom told Capital.
Last month, Ethio-Telecom announced that for the last seven years the contribution of international calls to revenue decreased dramatically from 20 percent to 5 percent.
“Right now we are in a sound and stable position but at the beginning of the fiscal year the company was at risk from both internal and external challenges,” according to the telecom’s statement.
The CEO said that the unpaid maturing loans contributed to instability. By failing to pay back loans their image was tarnished and their ability to sign new Service Level Agreements (SLA) impeded.
The Telecom had to work hard to restore trust. They convinced one vendor, Ericson, to stay in the country and finish a project which was due at the end of 2016. They conducted weekly follow-up meetings with vendors to improve relationships as well.
“We strived from day one to strengthen our bargaining power otherwise it would be hard to convince vendors to maintain the infrastructure they had built,” said Frehiwot.
After establishing better relationships, the telecom used the confiscated security bonds and penalty payments from its vendors to finalize its minor network expansion in Addis Ababa. The 19.5 million dollar minor expansion project in Addis Ababa is expected to begin operating within two to three weeks, although there are some places where the telecom has yet to find installation sites for towers.
In Jemo, only one green field site was found to plant a tower. Other areas like Bole Medhanealem are too congested but building owners have not agreed to put towers on their roofs.
“Using the confiscated bonds and penalties we will expand the network in other major cities,” she added.
Last week the telecom announced it generated 16.7 billion birr from inland services with USD 33.6 million shares from international transactions.
The telecom also achieved 80% of its target which was 20.86 billion birr. The report revealed that active mobile subscribers increased by four million since July 1, 2018, raising the total number to 39.54 million. The number of inactive subscribers and those on idle status was 22.26 million and eight million respectively.
They planned to earn 47 billion birr this fiscal year which would be 10 billion birr more than the year before.
“When we discussed discounting tariffs there was some debate” Frehiwot told Capital. “If we cared about the report more than the performance we would have adjusted our plan. If we took into account the 50 percent discount, we would reduce the goal by billions and if we did that we would have achieved 100 percent.”
The telecom began hosting more than one million calls after it minimized the international call tariff and took action against fraud.
The calls increased from 400,000 to 1.2 million this month, according to data obtained from the telecom.
The telecom also listed the challenges of the coming semester including sustaining the reforms by establishing two divisions to curb its challenges in its international business and resource management.
The CEO mentioned that Ethio Telecom has agreed to work with Saudi Telecom. The agreement with Saudi Telecom (STC) was interrupted in 2014 when the telecom asked them to settle payments for fraudulent calls.
“The host or the initial wouldn’t be asked to do so according to the GSMA standard,” stated the CEO. “More than 6 million potential calls could have been obtained from Saudi if the two could have smoothed over their relationships earlier.”
The Telcom collected fees on Application to the Person (A2P) for the first time. A2P is a text message that was generated from the application. The International business monetized the process in which the Telcom signed agreements to charge A2P SMS and received payments upfront in foreign currency.
Among the challenges the telecom paid special attention to were the cable cuts which it lines as affecting the network quality and the infrastructure. It was said to line up various interventions to curb the problem including the bilateral efforts it began with the Ethiopian Electric Power (EEP). The telecom agreed to pay EEP 20 million birr annually for carrying the telecom line with the power line which is going to make it dangerous to cut.
Engagements with the local security and administrative people will be another intervention.
Within the past six months, the telecom also announced that it has saved more than 100 million birr in operational costs.
Power interruption was also a major issue. Twenty percent of the power for its towers comes from solar and 40 percent from fuel generators. Towers in remote areas are difficult to refuel and maintain.
Voice calls decreased from 74 percent to 63 percent this year as data usage spiked, now amounting to 29 percent of use.
“We will focus on Value Added Services (VAS) to improve our revenue and the contribution of the telecom in other sectors,” said Frehiwot.

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