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Vodafone Group plc is a British multinational telecommunications company headquartered in London and with its registered office in Newbury, Berkshire. It is the world’s third-largest mobile telecommunications company measured by both subscribers and 2011 revenues and had 439 million subscribers as of December 2011.
Vodafone owns and operates networks in over 30 countries and has partner networks in over 40 additional nations. Its Vodafone Global Enterprise division provides telecommunications and IT services to corporate clients in over 65 countries. It had a market capitalization of approximately 89.1 billion British pounds as of July 6, 2012.
Vodacom is now eyeing Ethiopia, opening an office hoping to enter the last mobile greenfield opportunity in Africa. They opened a representative office in Addis, on December 3 to be in poll position if Ethiopia ever opens the telecom sector to international companies.
Vodacom has a strong presence in Africa in places like South Africa, Lesotho, Mozambique, the Democratic Republic of Congo and Tanzania.
Now it, along with other hopeful operators, is making a move on Ethiopia, where telecoms solutions are still provided by a state monopoly, and penetration is at a relatively low 23 percent. The group has opened an office in Ethiopia and is vying for a license to provide value-added services.
Ethiopia’s state monopoly cellular company ethio telecom had 21.1 million connections out of a 92.9 million population at the end of 2012, the latest available figures. By far the majority – 99 percent – are prepaid. Only 13 percent of the country is covered by 3G, and SIM penetration is at 23 percent, according to reports.
However, Ethiopia has ruled out liberalizing the sector, with the state instead spending over USD 1.6 billion on further expansion infrastructures.
Romeo Kumalo, Chief Operating Officer for Vodacom International Business talked with Capital’s Groum Abate about his company’s future plans of operations in Ethiopia. Excerpts:
Capital: Why did you open an office here when the telecom sector is not yet privatized?
Romeo Kumalo: We think Ethiopia presents us with the greatest opportunity. We have enterprise clients that are present here in Ethiopia and we will be giving service to them until the moment the market opens. So we are getting ready to enter the telecom business when it opens here. We are also keen to play a part in boosting the sector in any way possible and we hope to learn from the Ethiopian people and humbly contribute our experiences in the telecom sector and participate in the growth of the Ethiopian economy
Capital: Do you think the telecom sector will be open to the private sector anytime soon?
Kumalo: In all our engagement with government authorities here in Ethiopia, we have gotten the impression that it will be privatized soon. The authorities have also indicated that it will be liberalized soon. But we are obviously encouraging the government to privatize and open up the sector not only to Vodacom but also to others with an open and transparent process to bring in more players into the market so that there will be fair competition. Currently Ethiopia does have only one operator. When we see neghbouring countries in East Africa, like Uganda Kenya, Tanzania, Sudan and even Nigeria there is more than one operator. So we think there is a great opportunity here as Ethiopia does have only one operator and the market is under penetrated. The Economy is growing at a fast and steady rate and the population is huge. So we want to be part of the service providers in Ethiopia.
Capital: What is the view of Ethiopian Government officials about your presence and the telecom sector in general?
Kumalo: Their view is very appealing to us. They even encouraged and helped us a lot in the process of opening our office here. We applied for what you call ‘a value added service license.’ And we are ready to invest in Ethiopia tomorrow. So as Vodacom we are eager and ready to invest in Ethiopia.
Capital: Can you explain what a value added service license is?
Kumalo: It is a license that deals with operating selected telecom services. It is not a full blown mobile telecom service license. There is a specific directive by Ministry of Communication and Information Technology (MoCIT) that deals with the services allowed to be given by holders of this license. It deals with services such as premium short message service (SMS), virtual ISP and other things are allowed under this license. So we are hoping that sooner rather than later that the Ethiopian government will open up the market and issue more licenses. Even if they issue more than one license within this there will be an opportunity for one or two telecom companies to come here to provide service. And again the government should open up the telecom sector which will good and we will be able to extend services to more and more people and improve the quality of the service.
Capital: If the government opened the telecom sector and privatized ethio telecom would you be interested in acquiring the company?
Kumalo: We are not interested in buying ethio telecom. We want the government to grant more licenses. We want to compete with ethio telecom. We are also ready to invest heavily and build our own towers apart from the ones ethio telecom is using and provide service.
Capital: Why are you not interested in privatizing ethio telecom?
Kumalo: The best thing for us is to construct our own towers. But if we have the opportunity to work with the government and ethio telecom we will absolutely be interested and do that. But we would like to start operation in a green field. I think there is still an opportunity for a green field license that will allow us to operate by ourselves.