Safaricom Ethiopia Plc has placed an order to buy the first batch of three million subscriber identity module (SIM) cards ahead of its commercial debut scheduled for next month, disclosed Pedro Rabacal, chief technology officer.

The company sources its SIM cards from abroad. A single SIM card costs up to one dollar. China and Taiwan account for more than half of global production, followed by South Korea. Manufacturers work amidst a severe shortage of semiconductor chips caused by market closure due to the COVID-19 pandemic. As movement restrictions and lockdowns were lifted, demand skyrocketed, leaving manufacturers scrambling to produce.

According to industry observers, the shortage will take a while to resolve, as boosting production or erecting new manufacturing plants can take months. Nonetheless, firms are eyeing domestic production.

Lootah Industries Plc, part of the Dubai-based Lootah Group, unveiled plans for a smart-card manufacturing plant in Addis Abeba last year. MK Ethiopia, a joint venture between Vietnam-based MK Digital and Neutronet Plc, a local company, has secured an investment license to erecta cards manufacturingplant on a 3,000sqm plot of land in the capital.

The Ethiopian Communications Authority (ECA) has assigned the numbers Safaricom Ethiopia will use for its operations, including three- and four-digit short-codes and SIM numbers beginning with the "07" prefix.

The start of services by Safaricom Ethiopia will mark a historic milestone for Ethiopia where the monopoly of a state-owned enterprise held in the telecom sector for over a century comes to an end. As competition in telecom services is inevitable, the Communications Authority wants to hire an international consulting firm to analyse the telecom market and assess market dominance, wholesale and retail tariffs, and the potential for applying price caps.

Seven international consulting firms have shown interest last September, five of which have received the nod from officials of the Authority. The Communications Authority has completed technical evaluations, while the Ministry of Innovation & Technology reviews the consultants' financial standing as part of the Digital Foundation Programme kicked off with 200 million dollars from the World Bank last year. The selected consultant will evaluate the tariffs applied by telecom operators, develop a cost determination method, and set minimum and maximum price thresholds for the telecom market.

The work will enable the Authority to implement a directive issued last year, giving it the mandate to assess and set telecom tariffs.

Hiring consultants with international experience is crucial for this task, says Balcha Reba, director-general of the Authority. The study will take at least five months to complete.

The tariff determination will apply to the fees subscribers pay and interconnection fees and costs for sharing infrastructures such as towers and fibre optics.