Ethio telecom Faces $1.14b Shortfall in Push for Rural Connectivity

Firehiwot Tamiru, Ethio telecom's CEO, seeks a 1.14 billion dollar financing for a major infrastructure expansion this fiscal year, on her bid to deploy mobile networks in 1,000 new locations, including 496 rural areas. However, the state-owned teleco provider faces a substantial funding gap that could derail its ambitions.

The CEO told members of Parliament's Standing Committee for State-owned Enterprises Affairs that the financial constraints remain severe, disclosing that the investment required exceeds the company’s annual profit.

Ethio telecom has maintained a strong presence in the economy, reporting 91.4 billion Br in revenue for the 2023/24 fiscal year. The company also serves 80.8 million customers, solidifying its position as one of the largest telecom operators in Africa.

“We're seeking funding to close the investment gap,” she said.

With the expansion efforts, Frehiwot aspires to bridge the persistent digital divide, particularly in rural areas where connectivity remains limited. However, network interruptions and delays in project implementation have drawn criticism. She revealed that the company recorded 237 network failures in rural regions. Of these incidents, 55pc have been resolved, while 29pc are being addressed through ongoing projects. The remaining 16pc are under study, with problems such as electricity outages, insecurity and delays in accessing land. Firehiwot blames regional authorities’ slow responses to land requests as a major obstacle to timely network deployment.

Compounding the difficulties, Ethio telecom faces rising land lease costs in several regions. Balcha Reba, director general of the Ethiopian Communication Authority, called the fees “unfair” and urged federal lawmakers to intervene. According to him, the high costs imposed by regional states are undermining Ethio telecom’s ability to meet its connectivity goals.

“Regional authorities must act swiftly to address this issue,” Balcha told Parliament, warning that the lack of intervention could jeopardise the government's telecommunications development agenda.

However, Firehiwot emphasized that even with strong revenue figures, the profit margin is insufficient to fund large-scale infrastructure projects without external support.