South Africa's Vodacom opens office in Ethiopia, eyes foothold

ADDIS ABABA Tue Dec 3, 2013 12:36pm EST

ADDIS ABABA Dec 3 (Reuters) - South Africa's Vodacom Group opened its first office in Ethiopia on Tuesday, eyeing a foothold in a nation which is the last remaining large market on the continent to maintain a state monopoly in telecoms.

Africa's rapidly expanding telecoms industry has come to symbolise its economic growth, with subscribers across the continent totalling almost 650 million last year, up from just 25 million in 2001, according to the World Bank.

Ethiopia's state-run Ethio Telecom signed a $1.6 billion deal in July and August with Chinese firms Huawei and ZTE Corp to expand mobile phone infrastructure, including rolling out 4G services in the capital.

But Addis Ababa has ruled out liberalising its telecoms sector, saying the 6 billion birr ($321 million) it generates each year is being spent on vital infrastructure projects.

Romeo Kumalo, Vodacom Group's chief executive, told Reuters in the Ethiopian capital the firm would apply for a licence to provide value-added services - essentially all services other than standard voice calls - in the Horn of Africa country.

"But more importantly we want to position ourselves so when the market opens and the government does decide to grant licences in the consumer sector," he said.

"We would invest here tomorrow. Ethiopia is probably the most fantastic telecoms market on the continent. One operator, 80 million people, the economy growing at 7 percent - it's a great market."

The Ministry of Communications and Information Technology says it has received applications from more than 200 firms to provide such services.

South Africa's MTN Group, Africa's largest mobile phone company, has already been granted a similar licence to open an office and offer value-added services.

Kenya's top telecoms operator Safaricom has in the past expressed an interest in Ethiopia.

Ethiopian Prime Minister Hailemariam Desalegn, who took office last year, told Reuters in October that the government would not sell Ethio Telecom, which has a monopoly.

He said foreign investors were attracted to telecoms because it was a "cash cow" that required none of the effort to make profits that was needed to establish factories in manufacturing, an area which would create more jobs and growth. (Reporting by Aaron Maasho; Editing by Duncan Miriri and David Evans)

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