Ethiopia Telecom Market: Review of the World Bank’s 2025 Assessment

By Multilink Consulting 

About This Review

As Ethiopia’s telecommunications industry enters a defining decade, Multilink Consulting PLC—a leading investment and business advisory firm in Ethiopia—undertook a detailed review of the World Bank’s 2025 report, Ethiopia Telecom Market Assessment.

The report provides a comprehensive picture of Ethiopia’s telecom reform journey since 2018, highlighting major policy breakthroughs, private investment inflows, and areas where structural imbalances still hinder fair competition.

This article summarizes the World Bank’s findings across all seven sections and presents Multilink Consulting’s strategic insights on what comes next for Ethiopia’s telecom, digital finance, and infrastructure ecosystem.

“Ethiopia’s telecom reform has moved from monopoly to competition — the next phase must deliver market parity and investment sustainability.”

— Multilink Consulting Analysis, 2025

1. The Big Picture – From Monopoly to Modernization

Tracing Ethiopia’s Telecom Transformation Since 2018

Ethiopia’s telecommunications industry has undergone one of the most profound transformations in Africa’s modern economic history. For nearly a century, the sector operated under a state-controlled monopoly, with Ethio Telecom (EthioTel)—and its predecessors—serving as the sole provider of mobile, fixed-line, and internet services. This structure, while ensuring nationwide reach in earlier years, gradually became a bottleneck for innovation, efficiency, and global competitiveness. By the mid-2010s, Ethiopia’s connectivity levels lagged significantly behind regional peers, with limited broadband penetration, slow internet speeds, and some of the highest data costs in Sub-Saharan Africa.

Recognizing telecommunications as the backbone of digital transformation and economic growth, the Government of Ethiopia initiated a comprehensive reform agenda in 2018, aligning with the national policy framework known as Digital Ethiopia 2025. This reform sought to liberalize the sector, introduce private investment, and modernize infrastructure to bridge the country’s digital divide. The cornerstone of this transformation was the Communications Service Proclamation No. 1148/2019, which established a new legal and regulatory regime and created the Ethiopian Communications Authority (ECA)—an autonomous regulatory body tasked with licensing, spectrum management, and market oversight.

Building the Rules of a Liberalized Digital Economy

“The reform marked a paradigm shift—from a government-run utility to a regulated, competitive digital economy.”

— Multilink Consulting, Policy Analysis 2025

Opening the Market to Competition

The government’s most consequential decision was to open the telecom sector to competition after more than 125 years of monopoly. In 2021, the ECA awarded Ethiopia’s first private telecommunications license to Safaricom Ethiopia, a consortium led by Vodafone Group, Safaricom PLC, Sumitomo Corporation, and CDC Group (now British International Investment). This landmark transaction—valued at US$ 850 million for the license and US$ 150 million for mobile-money rights—signaled Ethiopia’s readiness to attract foreign direct investment (FDI) into one of its most strategic sectors.

By 2022, Safaricom launched commercial operations, introducing new services, network technologies, and customer experience standards that fundamentally disrupted Ethiopia’s telecom landscape. For the first time, Ethiopian consumers had a choice of operator, leading to improved service quality, competitive pricing, and rapid network rollout. The result was a sharp increase in connectivity—mobile subscriptions surged, broadband adoption grew, and average data tariffs fell by nearly 70 percent.

Meanwhile, Ethio Telecom—long the country’s sole operator—undertook significant internal reforms to stay competitive. It diversified services, modernized its network, and in 2021 launched telebirr, Ethiopia’s first large-scale mobile-money platform. Telebirr quickly became one of Africa’s fastest-growing digital-finance services, surpassing 53 million users within three years and integrating with utilities, transport systems, and government payment platforms.

Reform Milestones and Policy Commitments

Between 2018 and 2024, Ethiopia achieved several critical policy milestones:

Institutional Reform: Establishment of ECA as an independent regulator and adoption of the 2021 Licensing Directive and 2024 Regulatory Fees Directive to manage market entry, competition, and revenue transparency. Market Opening: Issuance of Ethiopia’s first private telecom license (Safaricom Ethiopia) and initiation of Ethio Telecom’s partial privatization process. Digital Inclusion: Expansion of 4G networks and early groundwork for 5G deployment, contributing to increased broadband penetration from less than 20% in 2018 to 41% by 2024. Financial Innovation: Introduction of telebirr and approval of mobile-money licensing for non-bank operators, later extended to m-Pesa under the National Payment System Proclamation Amendment (No. 1282/2023). Regulatory Convergence: Strengthened collaboration among ECA, National Bank of Ethiopia (NBE), and the Ministry of Innovation and Technology (MInT) to coordinate telecom, digital-finance, and ICT policies.

These reforms not only stimulated competition but also integrated telecommunications with broader economic development objectives, including industrial digitization, digital governance, and financial inclusion.

Remaining Challenges: From Opening to Equalization

Despite the progress, the World Bank identifies several structural challenges that must be addressed to complete the liberalization journey:

Dominance and Market Power: Ethio Telecom continues to enjoy structural advantages—exclusive access to legacy infrastructure, favorable spectrum terms, and government contracts—that make it difficult for competitors to achieve parity. Incomplete Privatization: The planned divestment of a 40–45% stake in Ethio Telecom has faced delays, leaving ownership and governance questions unresolved. Infrastructure Bottlenecks: The absence of independent TowerCos and InfraCos forces operators to duplicate investments or lease capacity under opaque pricing models. Policy Coordination: Overlaps between ECA, NBE, and other state entities occasionally blur accountability for digital-finance and telecom oversight.

The World Bank’s conclusion—and one shared by Multilink Consulting—is that Ethiopia’s telecom reform has succeeded in creating competition, but not yet fairness. The next stage must institutionalize market parity, regulatory transparency, and open access to infrastructure, ensuring that all players—public and private—operate under the same commercial and legal conditions.

“Ethiopia’s telecom success story is real, but unfinished. The foundation has been laid; the next task is balance and sustainability.”

— Multilink Consulting, Sector Commentary 2025

Strategic Outlook

Ethiopia’s journey from monopoly to modernization demonstrates the government’s commitment to economic reform and digital transformation. With the right policy continuity, the sector could generate over US$ 3 billion in additional GDP, create hundreds of thousands of jobs, and position Ethiopia as a digital gateway for East Africa.

However, sustaining this trajectory requires clear separation between policy, ownership, and regulation, ensuring ECA’s autonomy, and fully implementing competition frameworks such as SMP enforcement, RIO/RISO, and interconnection transparency.

Multilink Consulting views the current phase as a strategic inflection point: the success of Ethiopia’s telecom liberalization will depend less on new entrants—and more on creating a truly level playing field where innovation, efficiency, and consumer welfare drive the digital economy forward.

2. Market Growth and Sector Performance

Ethiopia’s Telecom Expansion and the Economic Ripple Effect

Over the last seven years, Ethiopia’s telecommunications sector has grown faster than almost any other segment of its economy. From 2018 to 2024, the market transitioned from a single-operator monopoly to a multi-player, high-growth digital ecosystem. According to the World Bank’s Ethiopia Telecom Market Assessment (2025), mobile subscriptions nearly doubled from 44 million to 87 million, while broadband penetration rose from less than 20% to around 41% of the population. This rapid uptake reflects both the liberalization of the sector and a strong latent demand for affordable, reliable digital connectivity among Ethiopia’s young and increasingly tech-savvy population.

At the heart of this expansion is the competitive dynamic introduced by Safaricom Ethiopia’s market entry in 2022. Within three years, Safaricom built a subscriber base exceeding 7 million active users, deployed 4G services in more than 25 cities, and attracted over US$ 3 billion in investment. Its presence catalyzed improvements in network quality, customer service, and digital offerings. At the same time, Ethio Telecom responded aggressively—expanding its fiber backbone, modernizing its 4G network, and launching new digital products such as telebirr, cloud hosting, and enterprise solutions. The result has been an overall expansion in consumer choice, falling prices, and improved broadband accessibility across Ethiopia’s major cities.

2.1 Mobile and Broadband Growth Trends

The growth trajectory of mobile and broadband subscriptions in Ethiopia between 2018 and 2024 demonstrates both scale and momentum. Mobile penetration rose from 42 subscriptions per 100 people to over 73, with smartphone usage increasing sharply as affordable handsets entered the market through import liberalization. Broadband adoption, previously limited to large enterprises and urban households, expanded to semi-urban and rural areas through 4G rollouts and fiber-to-the-home (FTTH) deployments by Ethio Telecom and Safaricom Ethiopia.

The World Bank report highlights that data consumption per user increased by 250% over the same period, reflecting Ethiopia’s growing appetite for digital content, e-learning, e-commerce, and streaming services. The average retail data price per gigabyte fell from about US$ 3.60 in 2018 to US$ 1.10 by 2024, positioning Ethiopia among the five most affordable data markets in Africa. This price adjustment, while reducing operator margins, significantly boosted accessibility for lower-income households and small businesses.

The launch of telebirr in 2021 and m-Pesa in 2023 further accelerated broadband usage by integrating financial services with mobile connectivity. The convenience of digital payments, airtime top-ups, and online transactions encouraged users to engage more actively with mobile data services, contributing to the overall digital ecosystem’s vibrancy.

2.2 Network Coverage, Quality, and Disparities

Despite these achievements, Ethiopia’s telecom development remains geographically uneven. The report notes that 4G network coverage reached approximately 40% of the population, but urban–rural gaps persist. Addis Ababa, Dire Dawa, Adama, and Bahir Dar enjoy robust network performance, whereas border regions and emerging towns in Benishangul-Gumuz, Afar, and Gambella continue to experience limited service and slow internet speeds.

ECA’s quality-of-service data indicates that while average download speeds improved to 4–5 Mbps, this still lags behind the Sub-Saharan Africa average of 7.8 Mbps. Moreover, Ethiopia’s fixed-broadband subscription rate remains low at less than 3 per 100 inhabitants, primarily due to the absence of wholesale open-access networks. Congestion in urban areas, limited tower density, and insufficient fiber backhaul capacity further constrain broadband quality.

To address these gaps, the World Bank recommends accelerating independent infrastructure licensing (TowerCos and InfraCos), revising the National Spectrum Plan, and establishing universal-service incentives for rural broadband. These steps would reduce duplication, lower capital costs, and create a more balanced national network capable of sustaining future 5G deployment.

2.3 Economic Impact and Employment Effects

The telecom industry’s expansion has had a profound impact on Ethiopia’s macroeconomy. The World Bank estimates that telecommunications now contribute nearly 3% of national GDP, both directly and indirectly. Over US$ 3 billion in foreign investment has entered the sector since 2020, primarily from Safaricom Ethiopia’s consortium members and supporting infrastructure ventures.

Employment generation has been equally significant. Ethio Telecom and Safaricom together employ over 20,000 people directly, while ancillary businesses—including tower construction, retail distribution, maintenance, logistics, and digital services—create hundreds of thousands of indirect jobs. The liberalization process has also stimulated entrepreneurship in mobile payments, e-commerce, and app development, particularly among youth-led start-ups leveraging APIs and telecom data services.

The World Bank’s analysis reaffirms that every 10% increase in broadband penetration leads to approximately 2.46% GDP growth, underscoring the transformative economic potential of telecommunications. Ethiopia’s digital connectivity has become a key enabler of productivity, innovation, and export competitiveness—particularly in finance, agriculture, and logistics.

2.4 Strategic Implications

A central recommendation of the World Bank report is the need to ensure parity between Ethio Telecom and Safaricom Ethiopia. The current regulatory and financial disparities between these operators distort competition and discourage further investment. Ethio Telecom continues to benefit from its state ownership, lack of historical license costs, and preferential access to government contracts and foreign exchange. Safaricom, on the other hand, has paid over US$1 billion in license and mobile money fees and faces higher operational costs for interconnection, infrastructure leasing, and spectrum access.

From a strategic standpoint, Ethiopia’s telecom growth story demonstrates the power of policy-led liberalization and private-sector participation. However, sustaining this momentum requires careful balance: affordability must not undermine investment viability.

Multilink Consulting emphasizes three imperatives for Ethiopia’s next stage of growth:

Ensure sustainability by aligning retail pricing with cost structures through transparent tariff regulation. Bridge rural connectivity gaps via incentive-based infrastructure sharing and Universal Service Fund (USF) projects. Encourage digital integration—linking broadband access to fintech, education, and industrial transformation programs.

With continued reform, Ethiopia’s telecom market is on track to become a US$ 10–12 billion industry by 2030, serving as both a catalyst for inclusive growth and a cornerstone of national digital transformation.

3. Regulatory Framework and Sector Governance

Ethiopia’s telecom reform story is not only about investment and technology — it is fundamentally a story of governance transformation. The World Bank’s 2025 assessment emphasizes that the sustainability of Ethiopia’s telecom liberalization depends on how effectively its regulatory institutions operate — independently, transparently, and consistently. Since 2018, the country has built the legal and institutional foundations for a modern communications regime. Yet, as the report highlights, the transition from policy intent to regulatory enforcement remains incomplete.

3.1 Laying the Legal Foundations

The turning point came with the enactment of the Communications Service Proclamation No. 1148/2019, which formally ended Ethio Telecom’s monopoly and established the Ethiopian Communications Authority (ECA) as an independent regulator. For the first time in Ethiopia’s history, telecommunications were treated not as a state utility, but as a competitive service governed by transparent rules.

The Proclamation granted the ECA broad powers — including licensing, competition enforcement, tariff regulation, spectrum management, and consumer protection. It also required all operators to obtain service-specific licenses under a unified framework. Subsequent directives, notably the 2021 Telecommunications Licensing Directive, 2022 Interconnection and Infrastructure Sharing Directives, and 2024 Regulatory Fees Directive, operationalized this new regime.

These legal reforms aligned Ethiopia’s governance structure with international norms such as the WTO’s General Agreement on Trade in Services (GATS) and the ITU regulatory framework, signaling the government’s intent to move toward full market transparency.

“ECA’s creation marked a paradigm shift — from government-run monopoly to independent market regulation.”

— Multilink Consulting Analysis, 2025

3.2 Strengthening Institutional Independence

While Ethiopia has established the formal regulatory architecture, true institutional independence remains a work in progress. The World Bank notes that ECA’s operational autonomy — though protected in law — is still constrained in practice by overlapping mandates with other public entities, notably the Ministry of Innovation and Technology (MInT), Ministry of Finance (MoF), and Ethio Telecom’s shareholder oversight board.

Budgetary dependence on government appropriations, rather than self-funding through regulatory fees, limits the ECA’s flexibility to attract skilled professionals and develop technical expertise in areas such as cost modeling, competition economics, and digital security supervision. Furthermore, policy–regulatory overlap persists: while MInT leads national ICT policy, ECA is expected to execute sector-level regulation — creating ambiguity when government ownership and market regulation intersect.

To address this, the World Bank recommends granting ECA financial and staffing autonomy, supported by a self-financing mechanism (retaining part of its fee revenue). Additionally, a multi-agency Digital Economy Council is proposed to coordinate the work of ECA, NBE, and MoF — ensuring that telecom, fintech, and digital policies are aligned rather than competing.

3.3 Licensing and Market Entry

ECA’s multi-tiered licensing regime, introduced in 2021, has been pivotal in attracting private investment. Ethiopia now recognizes distinct categories for Network Facilities, Network Services, Application Services, and Content Services, with the flexibility to issue class or individual licenses.

However, the World Bank’s analysis reveals that Ethiopia’s licensing diversification is still limited compared to regional peers. The absence of explicit license categories for Tower Companies (TowerCos), Infrastructure Companies (InfraCos), and Mobile Virtual Network Operators (MVNOs) has restricted the entry of specialized investors who could accelerate infrastructure rollout and reduce duplication.

To strengthen market depth, the Bank urges ECA to expand its licensing framework by creating new classes under Appendix B of the 2021 Communications Services Directive. This should include dedicated licenses for TowerCos and InfraCos — entities that can build, own, and lease infrastructure to multiple operators — as well as conversion options for virtual ISPs to become facilities-based operators. Establishing these categories would attract long-term capital, improve infrastructure efficiency, and allow major players to focus on their core services.

3.4 Competition and Significant Market Power (SMP) Regulation

A central element of modern telecom regulation is the ability to control abuse of dominance. In 2024, ECA formally issued the Determination of Significant Market Power in Relevant Markets (1/2024), identifying Ethio Telecom as dominant in five markets (including retail voice, fixed broadband, and wholesale transmission) and both Ethio Telecom and Safaricom as jointly dominant in one (mobile voice termination).

This marked an important step toward evidence-based regulation. Yet, as the World Bank notes, implementation of SMP remedies remains incomplete. Ethio Telecom continues to price some services below cost, cross-subsidize through telebirr bundles, and maintain preferential access to government transactions — practices that distort competition and discourage investment.

The report calls on ECA to enforce SMP obligations decisively, including accounting separation, cost-based pricing, and transparency requirements. It also recommends periodic cost studies to adjust mobile termination rates (MTR), ensuring they reflect true network costs rather than administrative estimates. Without such measures, Ethiopia risks a situation where a liberalized market structure coexists with monopolistic behavior — undermining investor confidence.

3.5 Spectrum Management and Infrastructure Access

Ethiopia’s spectrum allocation process has evolved significantly since liberalization. The ECA now manages spectrum through national band plans and competitive assignment mechanisms, moving away from opaque administrative allocations. However, the report highlights underutilization in several low-frequency bands (450–700 MHz), which could be leveraged for rural broadband expansion and IoT networks.

Equally critical is infrastructure access. Ethio Telecom and the Ethiopian Electric Power Corporation (EEP) currently control most fiber routes, towers, and backhaul facilities. Safaricom and new ISPs must either lease infrastructure under cost-uncertain agreements or invest in parallel networks — increasing duplication and capital inefficiency.

The World Bank advises ECA to enforce Reference Interconnection Offers (RIOs) and Reference Infrastructure Sharing Offers (RISOs) — requiring publication of standard access terms and transparent pricing models. It also encourages the establishment of independent wholesale infrastructure providers under cost-oriented regulation to promote shared investment in rural areas.

3.6 Consumer Protection and Transparency

Beyond market structure, the World Bank report stresses the importance of consumer protection, service quality, and transparency. The ECA has developed frameworks for quality-of-service monitoring, complaint handling, and consumer education, but enforcement remains limited.

Common issues include service outages, slow internet speeds, and inadequate data-disclosure practices by operators. Strengthening complaint-resolution mechanisms and public performance scorecards will be crucial for building consumer trust — especially as competition intensifies.

Multilink Consulting also notes that Ethiopia’s forthcoming Data Protection Proclamation (2024) offers an opportunity to create a robust privacy regime aligned with global standards such as the EU’s GDPR — a necessary condition for attracting data centers and international investors.

3.7 Multilink Consulting’s Policy Perspective

From Multilink Consulting’s standpoint, Ethiopia’s regulatory progress is commendable but fragile. The architecture exists — the challenge now is execution, enforcement, and independence.

We concur with the World Bank’s assessment that ECA must evolve from a rule-making agency into a proactive, data-driven regulator capable of balancing investor interests with consumer welfare. This requires:

Financial autonomy through fee retention mechanisms. Full enforcement of SMP rules to prevent anti-competitive behavior. Regular cost-model updates for interconnection and wholesale pricing. Greater coordination with NBE and MoF on digital-finance oversight. Public transparency in licensing, spectrum allocation, and performance metrics.

“Ethiopia has built the scaffolding of a modern telecom regulator; now it must bring that structure to life through enforcement, transparency, and consistency.”

— Multilink Consulting, Regulatory Insight 2025

Strategic Outlook

The World Bank (2025) report concludes that Ethiopia’s telecom liberalization will only succeed if regulatory institutions mature in step with market complexity. The next five years (2025–2030) must focus on institutional capacity building, competition enforcement, and alignment with global trade standards (WTO, AfCFTA, COMESA).

If achieved, Ethiopia will not only sustain telecom competition but will also establish itself as a regional model of digital governance — one where public institutions enable innovation rather than constrain it.

4. Competitive Dynamics and Market Structure

From Monopoly to Duopoly — and the Challenge of Market Parity

The liberalization of Ethiopia’s telecommunications sector has introduced the foundations of competition for the first time in the country’s modern history. Yet, as the World Bank (2025) assessment observes, competition remains structurally uneven and financially fragile. The market today is effectively a duopoly, dominated by Ethio Telecom and Safaricom Ethiopia, with smaller internet service providers and fintech entrants playing only marginal roles.

The opening of the sector was a watershed event, but the deeper test—creating a level playing field where competition drives innovation, quality, and sustainable profitability—remains an ongoing policy challenge.

4.1 Market Composition and Operator Performance

By the end of 2024, Ethiopia’s telecommunications market had grown to 87 million mobile subscribers and 41% broadband penetration, driven by rapid network rollout and affordable pricing. Yet market share distribution remains highly concentrated: Ethio Telecom controls approximately 80–85% of total subscriptions, while Safaricom Ethiopia accounts for the remaining 15–20%.

Ethio Telecom, the incumbent state-owned operator, remains the market’s dominant force. With over ETB 91.4 billion in revenue in FY2024 and more than 60,000 kilometers of fiber backbone, it continues to control most of the country’s network infrastructure, towers, and transmission capacity. Its integrated business model—covering mobile, fixed broadband, data hosting, and mobile money (telebirr)—has given it an entrenched position in both telecom and digital finance.

In contrast, Safaricom Ethiopia, which began operations in October 2022, has invested over US$ 3 billion to deploy more than 2,500 base stations and build its own network backbone. Despite strong growth (reaching over 7 million active users by late 2024), Safaricom continues to operate under significant cost pressure due to high license fees, foreign-exchange constraints, and reliance on leased infrastructure from Ethio Telecom and Ethiopian Electric Power (EEP).

“Competition has entered Ethiopia’s telecom market—but equality of conditions has not.”

— Multilink Consulting, Market Analysis 2025

4.2 The Early Benefits of Competition

The introduction of Safaricom Ethiopia has generated tangible consumer and economic benefits. Data prices have fallen sharply—by about 70% since 2017—making connectivity affordable to millions who previously could not access mobile broadband. Service quality, customer care, and product diversity have also improved.

Ethio Telecom has responded by adopting more customer-centric strategies: expanding 4G services to over 230 towns, introducing 5G pilot zones, and launching innovative packages such as telebirr-based discounts and bundled voice-data plans. Safaricom, meanwhile, has differentiated itself through international roaming, mobile-money innovation via m-Pesa, and localized marketing strategies in regional languages.

These dynamics have contributed to higher overall market penetration, faster broadband expansion, and increased digital inclusion—especially in urban centers like Addis Ababa, Adama, Hawassa, and Bahir Dar.

However, as both the World Bank and Multilink Consulting note, the short-term consumer benefits of falling prices have come at a long-term cost to sector sustainability. Average Revenue Per User (ARPU) dropped below US$ 1, one of the lowest in Africa, squeezing profit margins and discouraging new investment. Without structural cost reforms and infrastructure sharing, such pricing levels are unlikely to sustain the heavy capital expenditure (CAPEX) required for 5G deployment and rural coverage expansion.

4.3 Structural Imbalances and Market Constraints

Despite a formal liberalization framework, Ethiopia’s telecom market continues to exhibit deep asymmetries rooted in history, ownership, and access. The World Bank identifies several sources of imbalance that distort fair competition:

Infrastructure Ownership Concentration: Ethio Telecom retains near-exclusive control of the national fiber backbone and most tower sites, forcing new entrants to lease capacity under terms that are often non-transparent and cost-inefficient. Licensing and Fee Disparities: Safaricom paid US$ 850 million for its license, plus US$ 150 million for mobile-money rights, while Ethio Telecom has never been required to pay equivalent fees—creating a financial asymmetry that inflates operating costs for private entrants. Cross-Subsidization and Market Power: Ethio Telecom’s ability to cross-subsidize telebirr and bundle services at below cost undermines price competition. The report cites evidence of below-cost pricing of retail voice minutes relative to the regulated Mobile Termination Rate (ETB 0.23/minute). Regulatory Enforcement Gaps: While the Significant Market Power (SMP) framework exists, enforcement has been partial. Ethio Telecom continues to benefit from preferential access to public contracts and government payment systems, reinforcing its dominance. FX and Import Barriers: Safaricom and smaller ISPs face acute foreign-exchange shortages, delaying equipment imports and network rollout, while the incumbent’s state ownership ensures smoother access to FX allocations.

These structural barriers have collectively slowed the transition from liberalization on paper to competition in practice.

“True competition cannot thrive when one operator controls both the infrastructure and the marketplace.”

— Multilink Consulting, Regulatory Commentary 2025

4.4 Market Profitability and Sustainability

While Ethio Telecom’s revenues have tripled since 2017, Safaricom Ethiopia remains in a loss-making phase, with FY2024 losses estimated at six times its revenue. These losses stem from high license costs, infrastructure leases, and limited early revenue streams.

The World Bank cautions that if this imbalance persists, Safaricom could face long-term viability risks, potentially deterring other foreign investors from entering Ethiopia’s telecom or digital markets. A single-operator re-domination, even under a liberalized regime, would be a serious setback for Ethiopia’s reform credibility.

To ensure sustainable competition, the Bank recommends that ECA review the Mobile Termination Rate (MTR) model, potentially suspend it temporarily pending a comprehensive cost study, and establish a fair glidepath for future pricing. It also suggests abolishing on-net/off-net discrimination, allowing national roaming, and preventing cross-bundle subsidies that favor telebirr-linked customers.

4.5 The Path Toward Market Equalization

The World Bank’s message—and one strongly endorsed by Multilink Consulting—is that Ethiopia’s telecom reform is at a midpoint. The liberalization phase has succeeded in bringing in private capital, competition, and consumer choice. The next phase must now deliver market equalization, defined by four core outcomes:

Open Access: All operators must have transparent, cost-based access to essential network infrastructure. Regulatory Neutrality: The ECA must enforce identical obligations for all licensees, regardless of ownership. Financial Parity: Spectrum, license, and tax obligations must be harmonized to remove structural bias. Predictable Oversight: Enforcement of SMP and competition laws must be data-driven, timely, and consistent.

The creation of independent TowerCos and InfraCos—combined with mandatory publication of Reference Interconnection Offers (RIOs) and Reference Infrastructure Sharing Offers (RISOs)—will be key steps in achieving cost efficiency and transparency.

4.6 Multilink Consulting’s Strategic Insight

From Multilink Consulting’s perspective, Ethiopia’s telecom sector stands at a critical inflection point. The duopoly has broken the monopoly, but it has not yet produced a fully competitive market. Consumer benefits are evident, but structural inequality between public and private operators threatens long-term stability.

Our analysis suggests three urgent policy priorities:

Institutionalize Fair Access: Implement RIO/RISO frameworks with public disclosure and ECA oversight. Enable Infrastructure Neutrality: License TowerCos and InfraCos to serve both operators equally and encourage cost-sharing in rural rollout. Guarantee Competitive Parity: Harmonize taxation, spectrum pricing, and regulatory fees between Ethio Telecom and Safaricom Ethiopia to ensure balanced investment incentives.

If Ethiopia’s policymakers act decisively in 2025–2026 to implement these measures, the telecom sector can transition from a duopoly equilibrium to a vibrant, multi-operator ecosystem by 2030 — one that fosters innovation, inclusivity, and sustained digital growth.

“Ethiopia’s telecom competition is real — but incomplete. The next phase must focus not on more players, but on fairer conditions for the players that already exist.”

— Multilink Consulting, 2025 Sector Outlook

5. Ensuring a Level Playing Field for Digital Financial Services

Reviewing the Emerging Digital Finance Ecosystem

Ethiopia’s digital financial services (DFS) landscape has expanded at an extraordinary pace, transforming how individuals, businesses, and government agencies make and receive payments. The World Bank’s 2025 assessment finds that between 2021 and 2024, the value of digital transactions in Ethiopia increased from ETB 242 billion (US$175 million) to ETB 9.6 trillion (US$2.4 billion) — a 3,900 percent jump in value and a 1,300 percent increase in volume. Digital payments now represent roughly 1.4 percent of national GDP, a remarkable achievement for a country that, until recently, restricted non-bank financial innovation. The government’s National Financial Inclusion Strategy aims to raise financial inclusion to 70 percent by 2025, with digital finance as the primary driver.

The rapid rise of mobile-money platforms has been central to this progress. Ethio Telecom’s telebirr, launched in May 2021, became Ethiopia’s first non-bank mobile wallet and now exceeds 53 million registered users. The platform integrates bill payments, airtime, merchant services, and government-to-person (G2P) transactions, making it the single largest payment channel in the country. Safaricom Ethiopia followed suit in 2023 with m-Pesa, paying US$150 million for its license. By the end of 2024, m-Pesa had 10.8 million registered users, including 8.3 million active within a 90-day period. Alongside these giants, new fintech-led players such as Kacha Digital Financial Services and Yaya Wallet have obtained licenses from the National Bank of Ethiopia (NBE), expanding the range of payment options available to consumers.

While these developments have democratized access to financial services, the market remains structurally unbalanced. Telebirr’s dominance, coupled with Ethio Telecom’s ownership of the underlying network infrastructure, creates systemic advantages that make it difficult for competitors to gain market share. The report highlights that government ministries and agencies overwhelmingly use telebirr for collecting payments, reinforcing its market power. Ethio Telecom’s ability to cross-subsidize telebirr through its core telecom revenues further distorts competition, allowing it to offer low or zero-cost transactions that smaller fintechs cannot match.

The World Bank also notes that Ethiopia’s financial-sector liberalization is still incomplete. Until recently, foreign ownership in banking and insurance was prohibited under Investment Regulation No. 474/2020. The amendment of the National Payment System Proclamation (No. 1282/2023) opened digital-payment systems to foreign participation for the first time, allowing global operators like Safaricom’s m-Pesa to enter the market. However, regulatory gaps persist around data privacy, consumer protection, and interoperability. Without addressing these, the gains from competition risk being undermined by dominance and fragmentation.

To maintain fairness, the World Bank recommends strengthening coordination between the ECA and NBE to harmonize oversight of mobile-money services. The ECA, responsible for telecom regulation, and NBE, responsible for financial supervision, must collaborate on licensing standards, data protection, and interoperability rules. All licensed payment instrument issuers — including Ethio Telecom, Safaricom, banks, and fintechs — should be mandated to participate in the national instant-payment system managed by ETSwitch. This would guarantee equal access to payment channels and prevent exclusionary practices.

The report also calls for fair participation in government-related transactions. Currently, most person-to-government (P2G) and business-to-government (B2G) payments are processed through telebirr and the Commercial Bank of Ethiopia (CBE). This institutional favoritism limits consumer choice and discourages private investment. The World Bank advises that all state-owned enterprises and public agencies be required to accept payments from every licensed provider, using shared QR codes, USSD interfaces, and payment-aggregation platforms.

If evidence confirms abuse of market dominance, the ECA is encouraged to act. The regulator may impose financial penalties equivalent to the losses incurred by competing operators — estimated at about US$1.58 million per month in Safaricom’s case — and apply structural remedies such as national roaming, elimination of on-net/off-net discrimination, and prohibitions on bundle discounts tied to telebirr. Moreover, the transfer of the .et country-code top-level domain (ccTLD) to a multi-stakeholder governance model would promote platform neutrality and transparency across the digital ecosystem.

Multilink Consulting supports the World Bank’s position that Ethiopia’s digital-finance progress is real but uneven. The country has made remarkable strides in deregulation and innovation, but without a clear commitment to interoperability, data governance, and fair access to public payment streams, the system risks recreating a monopoly within a newly liberalized framework.

From our perspective, ensuring a level playing field requires three core actions: first, enforce interoperability across all digital-payment systems; second, require transparency in government procurement and G2P payment partnerships; and third, guarantee that regulatory rules — including fees, licensing, and consumer protection — apply uniformly to all participants. Only through these steps can Ethiopia achieve a balanced, open, and sustainable digital-finance ecosystem that supports innovation, investment, and inclusion.

6. Policy Recommendations and Reform Agenda (2025–2030)

Reviewing the World Bank’s Strategic Guidance for Ethiopia’s Telecom and Digital Economy

The World Bank’s 2025 assessment concludes that Ethiopia has achieved commendable progress in liberalizing its telecommunications and digital finance sectors, but warns that without deeper reforms, the benefits could remain uneven and short-lived. The report identifies four strategic priorities to ensure that liberalization results in genuine competition, sustained investment, and equitable access. These priorities are: placing all market players on the same footing; guaranteeing open and cost-oriented access to infrastructure; addressing abuse of dominant market power; and ensuring a fair operating environment for digital financial services. Together, these areas form the cornerstone of Ethiopia’s transition toward a fully competitive and inclusive digital economy.

6.1 Creating Equal Conditions for All Market Players

The Bank proposes that Ethiopia fully commercialize Ethio Telecom by separating it from direct government control and establishing independent corporate governance structures. Appointing a professional board and management team with no sitting government officials is a key reform step. The report also recommends revisiting the requirement for majority state ownership. Allowing a private strategic partner to acquire controlling interest could accelerate modernization, improve efficiency, and enhance financial discipline, as seen in Kenya’s Safaricom model. Opening future share sales to both Ethiopian and selected foreign investors under transparent safeguards would diversify ownership and strengthen corporate accountability.

6.2 Promoting Open Access to Infrastructure

The lack of an independent infrastructure market remains one of the most critical bottlenecks in Ethiopia’s telecom development. Both Ethio Telecom and Ethiopian Electric Power (EEP) currently own and control most national fiber networks, towers, and backhaul systems. New entrants like Safaricom and emerging ISPs are forced to lease capacity from these incumbents at prices that lack transparency or are required to duplicate infrastructure at high cost. This situation limits service coverage and inflates the cost of expansion.

To address this, the World Bank urges the Ethiopian Communications Authority (ECA) to operationalize the Reference Interconnection Offer (RIO) and Reference Infrastructure Sharing Offer (RISO) frameworks, ensuring fair and cost-based access to essential facilities. These mechanisms should be reviewed and published regularly to promote transparency and compliance. The report also recommends the introduction of new class licenses for Tower Companies (TowerCos) and Infrastructure Companies (InfraCos), allowing them to build, own, and lease infrastructure to multiple operators. Establishing such entities would help attract private capital and reduce the duplication of assets. The Bank also advises setting license fees at levels that attract, not deter, investors and prioritizing long-term tax revenues over one-time license charges.

Beyond regulatory reforms, proactive investment incentives are essential. The government should reduce tax burdens and spectrum fees for operators investing in rural areas, ensure access to foreign exchange for telecom imports, and utilize funds from the World Bank and the Universal Service Fund (USF) to co-finance large-scale broadband projects. Simplified approval procedures and clear rights-of-way would also encourage private-sector participation in rural broadband rollout, ensuring inclusive access.

6.3 Addressing Abuse of Dominant Market Power

The report highlights a growing concern that Ethio Telecom’s dominance—though legally recognized—has translated into anti-competitive practices that disadvantage new entrants. Evidence suggests that Ethio Telecom prices retail voice and data services below the regulated Mobile Termination Rate (MTR), which currently stands at ETB 0.23 per minute. The company’s telebirr-linked discounts and data bundles further strengthen its position by cross-subsidizing services in a way competitors cannot replicate.

The World Bank warns that this imbalance, if left unchecked, could jeopardize the long-term viability of Safaricom Ethiopia and deter future investors. It recommends that the ECA review the current MTR model to reflect actual cost structures and possibly suspend it temporarily until a comprehensive cost study can establish a fairer rate. Other measures include prohibiting on-net/off-net price discrimination, introducing national roaming agreements, and ensuring that operators with Significant Market Power (SMP) do not use cross-bundle subsidies to distort competition.

If evidence of abuse persists, ECA should consider applying penalties proportionate to the financial losses incurred by affected competitors, estimated at roughly US$1.58 million per month in Safaricom’s case. Stronger enforcement of SMP obligations, including accounting separation and cost-based pricing, will be necessary to restore competitive balance. These actions would send a clear signal to investors that Ethiopia’s liberalization process is credible and rules-based.

6.4 Establishing Fair Competition in Digital Financial Services

In parallel to telecom reform, Ethiopia must ensure a balanced environment for digital finance. The report finds that government ministries and agencies currently favor state-owned platforms—particularly telebirr and the Commercial Bank of Ethiopia—for person-to-government (P2G) and business-to-government (B2G) payments. This practice reinforces incumbency and limits market access for other payment service providers.

To promote fairness, the World Bank recommends amending the Electronic Payment Directive (71/2013) to broaden definitions of payment channels and banks, ensuring greater consumer choice. The National Bank of Ethiopia should also enforce the new Directive 1069/2025, which mandates that all banks and payment instrument issuers, including Ethio Telecom and Safaricom, participate in the instant payment system managed by ETSwitch. Furthermore, all government agencies should be required to accept payments from any licensed provider using shared USSD codes, QR standards, and interoperable platforms.

Finally, ECA should collaborate with NBE and the Ministry of Finance to prevent territorial exclusivity and encourage open access for digital payment services. This multi-agency approach would help align telecom and financial sector policies, ensuring that digital finance supports, rather than distorts, fair market growth.

6.5 Multilink Consulting’s Perspective on the Reform Agenda

From Multilink Consulting’s standpoint, the World Bank’s recommendations form a coherent roadmap for completing Ethiopia’s digital transformation. The liberalization of telecommunications and financial services is one of the most significant reforms in Ethiopia’s economic history, but its success now depends on execution. Creating a level playing field requires consistent enforcement, transparent governance, and regulatory independence.

Multilink emphasizes three immediate priorities for 2025–2030. First, finalize Ethio Telecom’s commercialization or partial privatization to depoliticize the sector. Second, operationalize open-access infrastructure markets through TowerCo and InfraCo licensing and transparent RIO/RISO frameworks. Third, harmonize digital finance and telecom regulation to ensure that payment ecosystems remain open, interoperable, and non-discriminatory.

If implemented, these reforms will transform Ethiopia’s telecom and digital finance markets into engines of investment and inclusion. The rewards will extend far beyond the sector—driving job creation, tax revenue, and innovation across the broader economy. A fair, predictable, and investment-friendly market will not only attract capital but will also build consumer trust, ensuring that Ethiopia’s digital revolution is both equitable and sustainable.

7. The Path Forward and Final Reflections

Shaping Ethiopia’s Digital Future

Ethiopia stands at a defining moment in its telecommunications and digital transformation journey. The World Bank’s 2025 assessment presents both a story of progress and a warning about fragility. Over the past seven years, the country has moved from a closed, state-owned monopoly to a partially liberalized, multi-operator ecosystem. Ethio Telecom’s modernization, the entry of Safaricom Ethiopia, the establishment of the Ethiopian Communications Authority (ECA), and the emergence of digital financial services have collectively reshaped the landscape. Yet the deeper question remains: can Ethiopia sustain this reform momentum and deliver a competitive, fair, and investment-friendly digital economy?

The evidence suggests that Ethiopia’s reform effort has been genuine but uneven. On the positive side, telecom liberalization has attracted foreign capital exceeding US$3 billion, expanded broadband coverage, reduced data prices, and spurred financial inclusion. The launch of telebirr, m-Pesa, and other fintech platforms has brought millions of people into the formal economy for the first time. The ECA has also demonstrated early signs of regulatory maturity, issuing key directives and asserting its authority over licensing, interconnection, and significant market power (SMP).

However, significant challenges persist. Market dominance remains heavily tilted in favor of Ethio Telecom, whose control of infrastructure, government contracts, and cross-subsidized services continues to distort fair competition. Safaricom’s losses underscore the financial risks faced by new entrants under current market conditions. Meanwhile, the regulatory system, though well-designed in law, still requires stronger independence, deeper technical capacity, and consistent enforcement. The digital financial ecosystem—while dynamic—risks reproducing monopoly structures if interoperability and open access are not strictly enforced.

The World Bank’s findings align with Multilink Consulting’s long-standing position that liberalization must evolve beyond licensing toward equalization. The focus now should be on institutional performance, market governance, and operational fairness. Ethiopia’s next phase of reform should aim to balance private-sector dynamism with public accountability, ensuring that growth benefits consumers, businesses, and the broader economy alike. This requires transforming the ECA and NBE into fully autonomous, data-driven regulators that enforce rules without political interference and coordinate effectively across sectors.

The World Bank’s policy roadmap for 2025–2030 provides clear direction. It calls for completing Ethio Telecom’s commercialization or partial privatization; harmonizing spectrum, tax, and license regimes; and opening infrastructure markets to independent TowerCos and InfraCos. It also highlights the need for transparent publication of Reference Interconnection Offers (RIOs) and Reference Infrastructure Sharing Offers (RISOs), coupled with cost-based pricing models. In digital finance, it stresses mandatory participation of all providers in the ETSwitch instant-payment system and universal acceptance of payments across government and private platforms. Together, these reforms would anchor Ethiopia’s digital economy on principles of fairness, interoperability, and inclusion.

From Multilink Consulting’s perspective, these recommendations are not merely technical—they are structural. Liberalization without institutional accountability risks entrenching new monopolies under a different name. A level playing field must therefore extend across both the telecom and financial ecosystems, ensuring that public and private players operate under identical standards of transparency, taxation, and governance. This also means protecting consumer rights, ensuring service quality, and establishing mechanisms for redress and transparency.

Ethiopia’s success will depend on whether it can move from policy intent to credible implementation. If the government embraces these reforms, the country could witness a new era of digital competitiveness—one where broadband and financial inclusion power industrialization, job creation, and trade integration. Failure to act decisively, however, would risk reverting to a quasi-monopolistic system, deterring investment and slowing innovation.

As Multilink Consulting concludes from its review, Ethiopia’s telecom and digital finance reform journey has already crossed the threshold of possibility. What lies ahead is a governance challenge. Building institutions that are independent, transparent, and responsive will determine whether the promise of digital transformation becomes a sustainable reality. The task before policymakers, regulators, and industry stakeholders is not just to open markets, but to maintain them as fair, competitive, and inclusive engines of growth for years to come.

Published by

Multilink Consulting PLC

Investment & Business Advisory – Addis Ababa, Ethiopia

www.multilinkconsult.com