The national telecom operator, Ethio Telecom, has acknowledged that its expansion plans are facing significant challenges due to the country’s tight foreign exchange situation.

The company recently announced that critical infrastructure projects worth over 300 million dollars have been delayed or temporarily put on hold. The main reason, it says, is the difficulty in securing the Letters of Credit (LCs) needed to import essential network equipment and software from international partners, as the local banking system struggles to fully meet its large foreign currency requirements.

Despite the government’s ongoing reforms to liberalize the financial sector and improve foreign exchange availability, the company notes that the gap between demand and supply remains wide, especially for large, capital‑intensive sectors like telecommunications.

While Ethio Telecom reports strong domestic revenue in Birr, the challenge of accessing sufficient foreign exchange continues to constrain its ability to modernize and expand digital infrastructure across the country.

In its 2025/26 budget year, the company’s foreign currency needs exceed one billion dollars, primarily for network upgrades, expansion, and new technology rollouts. CEO Frehiwot Tamru explained that projects valued at over 300 million dollars, already completed up to the procurement stage, are now awaiting the necessary LCs.

“Although we have good relationships with local banks, their capacity to fully meet our large foreign exchange needs is limited,” Frehiwot said.

The situation has been influenced by the exchange rate changes adopted in 2024, which led to a depreciation of the Birr. Since telecom equipment is largely priced in foreign currency, this has increased the cost of imports when calculated in local currency.

The company said it is in ongoing discussions with the National Bank of Ethiopia to address the issue, and is exploring alternative ways to ease the forex pressure on its operations.

Industry observers note that the telecom sector is highly dependent on imported equipment and capital investment, and that prolonged forex constraints could slow down the pace of digital transformation, especially in rural and underserved areas.

To help manage the situation, Ethio Telecom is broadening its revenue streams beyond the domestic market. It is expanding its footprint in neighboring countries and growing its international services, including international voice, data, and telecom‑related offerings.

The company is also in talks with international financial institutions to explore additional credit and financial support options for its expansion plans.

On the recent World Bank assessment of the telecom market, which raised questions about Ethio Telecom’s pricing, CEO Frehiwot offered a clarification. She described the concern about “predatory pricing” as a misunderstanding of the company’s earlier price reductions, which were introduced in 2018, long before the entry of new operators and the market liberalization process.

“These reductions were designed to make services more affordable and to support the vision of Digital Ethiopia,” she said, adding that the company’s low prices today reflect operational efficiency and internal cost‑saving measures, not a below‑cost strategy.

“If the company adjusts prices, the impact on its 87 million customers would be significant, and our intention is to keep that burden as light as possible,” Frehiwot added.

In its half‑year performance for the first six months of 2025/26, Ethio Telecom posted Birr 85.02 billion in revenue, up 37% compared to the same period last year, achieving 81.1% of its target for the period.

The company earned 83 million dollars in foreign exchange (88.19% of plan), with 69 million dollars from international services and 16.02 million from telecommuting services, an increase of 7.2% year‑on‑year.

It saved over 4.15 billion Birr through cost‑efficiency programs (129% of plan) and generated an additional 89.9 million Birr by renting out unused space and properties.

During the period, Ethio Telecom recorded a net profit of Birr 42.36 billion, with a 49.8% profit margin. It has allocated 62.92 billion Birr for recurrent expenditure and 52.92 billion Birr for capital projects, while paying 35.6 billion Birr in taxes to the government.

Zemen Bank, one of Ethiopia’s leading private financial institutions, has experienced remarkable growth in the first half of the 2025/26 fiscal year, with its capital increasing by 50% in just six months.

According to a statement from the bank, its total assets rose to 106 billion birr during this period, marking a 20% increase from the previous fiscal year’s close in June 2025, when assets totaled 88.6 billion birr.

Founded in 2008, Zemen Bank has quickly become a key player in the financial sector, now holding a position comparable to institutions established over 25 years ago, following the reopening of the financial industry to private investment in the mid-1990s.

The bank’s President, Dereje Zebene, reported that customer deposits have surged to 80 billion birr, reflecting strong growth and customer confidence. This represents a nearly 25% increase from the 65 billion birr mobilized at the end of the 2024/25 financial year.

Dereje noted that Zemen Bank achieved a profit exceeding 5 billion birr and raised its paid-up capital to 14 billion birr, up from 9.4 billion birr in June 2025. He emphasized that the bank has experienced a significantly improved performance over the past six months compared to the same period last year.

After reviewing the bank’s half-year performance, the Board of Directors, led by Chairperson Enye Bemir, expressed appreciation for these achievements and underscored the importance of continued effort in the second half of the fiscal year to attain even better results.

Dereje highlighted that the bank’s growth is intrinsically linked to the growth of its customers. “Our Bank’s growth is the growth of our customers. When we refer to the Bank, it also signifies that our customers have grown in tandem,” he explained.

Zemen Bank is recognized for its commitment to technology and a customer-focused approach.

Dereje further emphasized that the bank’s robust expansion contributes to national economic development by mobilizing savings, increasing credit supply, supporting investments, enhancing foreign currency earnings, and enabling the country to capitalize on these gains. This process allows customers to operate more effectively, create jobs, and contribute significantly to the economy.

During a half-year performance review meeting on January 24, 2026, attended by senior and middle management, Dereje stressed that sustainable performance relies on collective effort and mutual trust.

“Across all areas of operation, we must collaborate diligently to meet our customers’ needs. If we succeed, I am confident that in the next six months, we will achieve even better results. Safeguarding our customers’ trust remains our greatest responsibility,” he stated.

Zemen Bank is recognized as an innovative financial service provider in Ethiopia, distinguished by its unique business model and modern banking services.

Its mission is to deliver a distinct financial experience, foster an engaging work environment, and create sustainable value for stakeholders through an empowered workforce and technology, applied in a socially responsible manner.

By evolving from a corporate-focused entity to a versatile bank serving both corporate and retail clients, and by prioritizing innovation and efficiency, Zemen Bank continues to make meaningful contributions to Ethiopia’s economic development and the changing banking landscape.

In a strategic move towards increased financial independence, Ethiopian Electric Power (EEP) has begun funding key energy projects with its own resources, thereby enhancing its profitability. This initiative was highlighted at a ceremony yesterday, where EEP announced the successful completion of the Aysha II Wind Farm project.

Initially financed by the Chinese Export-Import (Exim) Bank, the wind farm project was ultimately completed using EEP’s own funds after the bank withdrew its financial support. The Aysha II Wind Farm, located approximately 680 km east of Addis Ababa and 20 km west of the Djibouti border, is positioned near an existing international transmission line.

Recognized as a highly viable project for the international energy market, it has now been officially completed.The agreement for this project, signed nearly a decade ago, specified that the Chinese Exim Bank would cover 85% of the total cost, with the Ethiopian government responsible for the remaining 15%.However, Moges Mekonnen, Head of Corporate Communication at EEP, noted that only 40% of the pledged funds were disbursed by the bank.

Despite the funding challenges, the wind farm began generating electricity three years ago and has now been fully completed, with a total installed capacity of 120 MW.EEP’s leadership opted to use its own resources to finalize the remaining portion of the project, which is already producing positive results.The funding delay was largely due to an increase in Ethiopia’s external debt risk, which led the Chinese contractor, Dongfang Electric Corporation, to continue work on the project for years without sufficient financing.

Ultimately, EEP took the initiative to finance the completion independently.The project consists of 48 turbines, each with a capacity of 2.5 MW, and is estimated to have cost USD 257.3 million. Located in the Sity Zone of the Somali Region, about 180 km east of Dire Dawa, the wind farm has significant potential to generate foreign currency through energy exports to Djibouti, which already imports Ethiopian green energy.Dongfang Electric Corporation has considerable experience from previous work on various Ethiopian electromechanical projects, including hydropower developments.Meanwhile, EEP has maintained a stable financial position, partly due to the government’s absorption of its substantial domestic borrowing—over half a trillion birr—from the state-owned Commercial Bank of Ethiopia.

Moges emphasized that the profits earned by EEP are vital not only for improving public access to energy but also for enhancing the company’s ability to finance future projects independently. “Our profitability strengthens our confidence to take proactive steps in project financing like Aysha,” he stated.He also cited the Koysha Hydropower Project as another example of EEP’s leadership after SACE, the Italian insurance-financial group, suspended its financing. “EEP’s involvement in Koysha demonstrates how the company can manage projects independently as its profitability grows,” Moges explained to Capital.

The Ethiopian government continues to seek international financiers to complete the Koysha Hydropower Project, a major dam on the Omo River designed to generate 2,160 MW of electricity.Once finished, it will be Ethiopia’s second-largest hydropower plant after the Grand Ethiopian Renaissance Dam.Approximately USD 1 billion is needed to finalize Koysha, prompting the government to explore commercial loan options, a financing route it had largely paused since 2017 due to increased external debt risk.A week ago, Brook Taye, CEO of Ethiopian Investment Holdings, which owns EEP, reported that the electric generator earned 2.1 billion birr in profit during the first half of the current fiscal year, marking a shift from long-term heavy debt.