Friday, November 8, 2024

Ethio Telecom applies for first American loan in over a decade

By our staff reporter, Photo by Anteneh Aklilu

For the first time in over a decade, the state-owned telecom company Ethio Telecom is in the process of applying for a loan from an American financier. The telecom behemoth has surpassed its own forecasts to wrap up another stellar year in the just-concluded financial year.

The 130-year-old business revealed that its unaudited net profit increased to 21.8 billion birr, or 108.7% of the target.

In addition, the net profit increased by over 21%, or nearly 3.8 billion birr, compared to the previous year.

Frehiwot Tamru, the CEO of Ethio Telecom, declared, “In the last six years, we have quadrupled our net profit.”

At the press conference on Thursday, July 10, Frehiwot stated, “The 2023/24 budget year marks the completion of the second year of our three-year LEAD Growth strategy. And as a result, our subscriber base has grown by 8.9% from the same period last year, reaching 78.3 million customers, achieving 100.4% of our target.”

The company’s revenue in the reported period rose by 21.7% compared to the previous year, amounting to 93.7 billion birr, a rise of 16.7 billion birr over the previous year and 103.6% of our objective.

The unaudited financial report, according to the CEO, shows an EBITDA of 42.44 billion birr, or 47%, hitting 102.4% of the goal.

The state-owned telecom behemoth, which also generates foreign exchange, has secured almost USD 198 million, climbing by about 21 percent and reaching 117.5% of the projection set for the year.

Comparably, the company, one of the two state firms that do not require a government guarantee to access overseas funds, paid out USD 58.45 million, or 3.4 billion birr, through vendor financing for telecom development projects that had previously been held.

One of the CEOs of state-run businesses with a high work rate, Frehiwot, asserts that her company has completed external audits for the preceding six years.

“We are currently in the process of obtaining funds from an American financial firm to undertake expansion in the current budget year,” she states, “because our audit report has been sound and would allow borrowing external loans with very minimal interest rates.”

The CEO of Ethio Telecom stated that the new funds are awaiting clearance from the appropriate government authority.

This would be the company’s first foreign loan since 2013, the year it inked a USD 1.6 billion contract to extend mobile services nationwide with two of China’s largest telecom companies, Huawei and ZTE Corporation.

For the project, the funds came from a Chinese financier similar to the one that concluded in the mid-2000s by ZTE.

Telebirr

Launched three years ago, Telebirr, which is one of Ethio Telecom’s growing wings, has also significantly improved in the past year. According to the company, the business segment has seen significant growth in several operational areas.

Ferehiwot reports that 47.5 million Telebirr users have signed up for the service this year, surpassing the goal by 107%.

“According to a National Bank of Ethiopia report from March, this achievement translates to a 45.7% share of the total mobile money service users in Ethiopia,” she continued.

A total of 1.81 trillion birr was transacted in a single year thanks to the digitization of financial transactions through Telebirr, which has also improved financial inclusion and accessibility.

Since its launch in May 2021, a total of 2.55 trillion birr has been conducted overall. Similarly, 915 million transactions have been made, with USD 4.7 million going towards overseas remittances.

The telecom operator said in a statement that fuel payments of a significant 233 billion birr had been processed through the use of Telebirr.

Regarding the service payment system upgrade, Telebirr helps 129 government institutions, excluding fuel payment, integrate their product and service payments.

According to the company statement, 51 billion birr were processed during the current budget year, out of the 63.9 billion birr that had been transacted using Telebirr.

“Notably, 36.8 billion birr were particularly attributed to payments made through the government’s electronic service offering (E-government), and 30.5 billion birr were recorded in the current budget year,” it added.

Telebirr provides microloans, microsavings, and other associated digital financial services in partnership with Dashen Bank and the Commercial Bank of Ethiopia.

“Our firm provided microcredit services worth 9.6 billion birr to 2.9 million clients in the budget year, reaching a total of 12.9 billion birr with 5.3 million customers since August 2022,” the statement read.

The company provided microloans, savings, and overdraft services to its consumers.

Additionally, 2.1 million consumers have saved 13.35 billion birr in the last nearly two years, compared to 1.3 million customers who saved a total of 9.7 billion birr throughout the year.

A total of 436 billion birr was transferred with banks during the budgetary year, bringing the total amount of money moved with banks since 2022 to 765 billion birr.

Currently, 28 banks are connected to Telebirr.

Expansion and Restoration

In terms of boosting the capacity and coverage of the telecom and digital infrastructure, the 4G mobile network was completed at 966 sites, while the 3G network was expanded at 682 locations throughout the year.

The company has announced that the 4G network service has been expanded to 124 more cities and districts, bringing the total number of accessible 4G cities to 424. The 5G network was expanded at 79 mobile stations during the year that concluded on July 7, bringing the total number of 5G stations to 189.

Furthermore, four regional capitals currently have 5G service accessible, and work is in progress to make four additional cities 5G-ready.

A total of 150 new mobile towers have been built and installed in 81 weredas throughout 12 regions and one city administration during the budgetary year.

There are currently 63 mobile towers in development. Furthermore, 132 mobile towers that are currently in use have had 2G and 3G extension work completed on them throughout 7 regions, totaling 104 weredas.

The CEO remembered that, in addition to the effects associated with theft and other causes, instability in different parts of the nation harmed telecom infrastructure and interrupted services.

“Our company implemented a restoration plan due to improvements in peace and security,” Frehiwot stated.

The telecom behemoth was able to repair 16 service centers, restore 179 mobile sites in 61 towns and woredas across 6 regions, and sign up 374 new fixed broadband customers, of which 62 are enterprise clients and 14 are financial institutions. Besides restoring 570 kilometers of fiber optic cable.

She said, “The company is still dedicated to continuing restoration efforts to guarantee that all Ethiopians have access to reliable and affordable telecom services.”

The corporation paid 9.97 billion birr in government dividends and 29.8 billion birr in taxes during the 2023/24 budget year.

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