The state monopoly Ethio Telecom (ET) has met 76 percent of its total profit target in the past fiscal year, registering a significant profit growth.
The monopoly enterprise that provides telecom service collected 21.5 billion birr in gross profit in the 2014/15 fiscal year. ET had anticipated a total profit of 28 billion birr.
Last year, ET grossed 17.5 billion birr in profits. This year, ET’s profit grew by four billion birr.
Sources at the enterprise told Capital that the profit was one of the major issues in the annual Growth and Transformation Plan evaluation launched by the management a week ago.
The evaluation process is underway this week and will reportedly continue in the coming week.
Power interruption has been stated as one of the major obstacles to meeting profit targets. The telecom giant is reportedly exploring other options for power support.
Telecom fraud was also allegedly identified as a major cause for underperformance. For instance, in the past fiscal year, several individuals including ET staff were arrested on allegations of telecom fraud. The individuals were accused of providing international telecom service illegally, costing the enterprise millions of birr.
“In the 2015/16 fiscal year, ET has established fighting fraud as a major priority,” sources told Capital.
Limitations on the supply of mobile and landline phone apparatus was also stated as another reason for missed profit targets. Sale of mobile phones was launched by the enterprise in December 2010, when Orange S.A., formerly France Télécom S.A, received management of ET for two years.
Weak achievements in landline service is still a problem for the company. Currently, total landline service subscription is fewer than one million. In the past fiscal year, the enterprise provided various attractive offers for customers with the aim of expanding the service.
ET targets to boost mobile network access to 113 million in the second Growth and Transformation Plan (GTP II), while the actual subscription is expected to be 91 million. The telecom giant currently provides mobile telephone service to approximately 50 million subscribers.
Broadband internet data subscription is projected to grow to 39 million from the current 1.46 million subscribers.
Mobile internet data coverage will also reportedly grow from 8 million to 16.9 million users, while overall internet data coverage is forecast to reach 10 percent from the current 3.3 percentage.
Recently Andualem Admassie, CEO of ET, told Capital that the telecom enterprise will not engage in significant infrastructural expansion in the next five years. Rather, the enterprise plans to upgrade current infrastructure to accommodate the anticipated rise in subscription.
The USD 1.6 billion network expansion project launched under GTP I has not yet been completed due to delayed negotiations with two Chinese telecom firms: ZTE and Huawei Technologies.
The telecom enterprise has awarded parts of the networking project to Ericsson, which won over ZTE in December 2014 because ZTE was unable to commence work on schedule. ET has since transferred one expansion circle to Huawei, as Ericson has been unable to meet its deadlines.