2. Communication technology status

and board of directors, which decides

unsatisfied owing to the inherently

the company strategy and designates

inefficient nature of monopoly

the General Manager, whose

operations and the imperative of a

nomination has then to be approved

quick return on investment for the

by the Government.

international investor.

2.4

Privatization

2.5

Licensing

Notwithstanding the monopoly of ETC,

Prior to the reform of the

in recent years the Government has

telecommunication sector in 1996,

been planning to partially privatize the

telecommunication service licences

company, aiming to allow the

did not exist

3

 in the telecom sector in

participation of a strategic investor,

Ethiopia: the service was under the

which should bring new funding and

control of the Government, which

new management techniques and

acted as operator, regulator and

skills to ETC. To permit private

policy maker. More recently, however,

participation in telecommunication

the necessity of opening the market

services, in 1998 the Government

to new investors created the need for

amended the Investment Proclama 

a structured licensing system to

tion, providing for private companies,

establish conditions and requirements

national or foreign, to invest in the

for the provision of telecommunication

telecommunication sector in

services, which implied the creation

partnership with the Government

of a regulatory authority (ETA) with

(Proclamation 116/1998). The

the power to  license and supervise

possibility of selling part of ETC shares

operators of telecommunication

to a private partner is currently being

services .

4

studied by a private consulting

company, PriceWaterHouseCoopers

Licensing procedures and guidelines

(PwC), which is analysing the current

were established under Regulation 47/

status of ETC and the possible terms

1999, and a licence for each of the

of the partnership. The results of the

services currently provided by ETC has

study were scheduled to be complete

been drafted by the Agency on the

by the end of June 2002, to be

basis of general principles of

submitted to ETC for a decision and a

telecommunication services, i.e. high

call for tenders. ETC's revenues last year

quality, efficiency, reliability and

amounted to around Birr 800 million,

affordability. The licensee has a duty

i.e. almost USD 100 million (Figure 3).

2

to comply with the conditions

Investment in the telecommunication

established in the licence regarding

sector has to be approved not only by

the quality of service, tariffs, and has

the Investment Authority, but also

to fulfil roll out and service targets

directly by the competent ministry

established by ETA in line with national

(Ministry of Infrastructures

telecommunication policy as set out

Development).

by the Government.

5

Although there is clear intent by the

These licences, which have already

Government to open ETC to private

been drawn up by the Agency and

investment, there is still some

submitted, are still being discussed by

uncertainty about the timetable for

ETC, which has not signed them.

this change. It is also unclear what

There is an apparent lack of

the entry conditions for the investor

agreement between ETC and ETA on

will be sometimes a period of

some licence requirements, in

exclusivity lasting 3 to 5 years in the

particular those regarding the roll out

provision of telecommunication

of services. The refusal of ETC to sign

services by the monopoly company is

the licence, at least for the moment,

guaranteed to the new entrant in

and the inability of ETA to enforce its

exchange for a higher investment. If

decisions, undermines the authority

the Ministry grants exclusivity to ETC

of the regulatory agency and points

for all telecom services, this may

to the continued concentration of

generate more revenues for the

power with the incumbent, which is

exchequer, but demand may remain

still the major and most influential

13