Radar | Jun 14,2020
March 21 , 2020
By SEBLE WONDEMAGEGN ( FORTUNE STAFF WRITER )
The state telecom monopoly designed the scheme for those who cannot afford a smartphone with two types of credit options. With the main aim of boosting telecom penetration and smartphone usage, Ethio telecom is set to introduce a device financing model, where customers can get phones on a credit basis.
The state telecom monopoly designed the scheme for those who cannot afford a smartphone with two types of credit options. The scheme also aims at upgrading customers from using feature phones to smartphones. With the new scheme, the company hopes the number of smartphone users will grow to 60pc from 33pc.
To carry out the scheme, the company has approached phone suppliers, manufacturers, importers, assemblers, and financial institutions such as microfinance firms and banks to agree on credit arrangements, according to Ephrem Arefaine, chief marketing officer of Ethio telecom, which plans to distribute smartphones that can access 3G and 4G.
”The research we conducted showed us that many people don't have the financial capability to afford smartphones,” said Ephrem. "We're in negotiation with suppliers and financial institutions to get and supply the devices to customers on credit."
Currently, the company is offering mobile devices only in exchange for full payment. However, with the new offer, anyone can access the devices through credit under one of two plans. Under the first plan, a buyer takes the phone and pays for it in monthly installments. Under the second, payments will be done in the form of deductions, while the buyer uses internet, data and SMS services.
In both cases, the credit will be completed after one or two years as per the interests of the customer, who will also sign contractual agreements. The scheme is expected to be launched in a month's time.
The company aims to provide access to smartphones to people with low incomes that cannot afford to buy the devices otherwise, according to Frehiwot Tamiru, CEO of Ethio telecom, which reports that there are 56.1 million functional mobile phone devices in the country and only 33pc of them are smartphones.
“The new model will replace the previous device supply model that requires buyers to pay the value upfront,” Frehiwot said.
Last year, the company, which has 15,000 permanent and 19,000 temporary employees, invested 50.4 million Br to distribute 70,000 mobile handsets to rural women.
It has announced service improvement and major tariff reductions on its fixed broadband services on February 27, 2020. The 123-year-old telecom service provider has already started supplying fixed broadband modems on credit with instalment offer and expects to start providing mobile devices on credit within a month.
Ethio telecom, which provides more than 20 different services, has launched an LTE Advanced Fourth-Generation (4G) network upgrade that delivers higher data speeds, at a cost of 173 million Br. The network upgrade was undertaken by Huawei, a Chinese telecommunications and ICT provider.
The introduction of telecommunications in Ethiopia dates back to the late 19th century. The Telephone & Postal Services Agency was established in 1941 and was reformed as the Imperial Board of Telecommunication Corporation in 1996.
The management of the company believes that when telecom services penetration grows by 10pc, it has a 1.4pc corresponding boost to the country's GDP.
Getie Andualem (PhD), an associate professor at Addis Abeba University, believes that starting the device financing model itself is one type of e-commerce, saying that the financing scheme will improve transaction speeds of money and marketing information.
"The mobile device supply should be in a quota, and financial organisations should control the payment method," he recommends.
In the first half of this fiscal year, the company has grossed more than 22 billion Br in revenues, achieving 104pc of its target. It also generated 73 million dollars in foreign currency from international business.
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