Ethiopia, 7 October 2025 — Ethiopia’s bold leap into telecom liberalisation is facing turbulence, as a new World Bank report reveals systemic imbalances that threaten fair competition, digital inclusion, and investor confidence.
The Ethiopia Telecom Market Assessment paints a complex picture: while the country has made strides since ending Ethio Telecom’s monopoly in 2018, the playing field remains tilted, raising questions about the much touted reforms.
At the heart of the issue is Safaricom Ethiopia, which entered the market in 2021 with a $850 million license and $1.6 billion in funding, including $100 million from the International Finance Corporation (IFC).
Despite its ambitious rollout, the company has struggled to gain ground.
The report highlights that Ethio Telecom retains dominance in six key market segments, while Safaricom is dominant in only one. Ethio Telecom’s pricing practices allegedly force Safaricom to absorb losses of up to $1.6 million per month on mobile termination rates.
“The market is liberalized in name, but not in practice,” the report notes, urging regulators to investigate anti-competitive behavior and ensure fair pricing.
Infrastructure access remains another bottleneck. Safaricom depends on Ethio Telecom and Ethiopian Electric Power for network expansion, yet faces bureaucratic delays and inflated costs.
The World Bank calls for transparent leasing frameworks, independent oversight, and regulatory clarity to prevent gatekeeping and foster innovation.
Digital inclusion also hangs in the balance. The report advocates for licensing Low Earth Orbit (LEO) satellite providers like Starlink and OneWeb to reach underserved rural communities, especially vital for humanitarian services, education, and economic resilience. Ethiopia’s vast geography and uneven infrastructure make satellite connectivity not just a luxury but a necessity.
Mobile money, a cornerstone of financial inclusion, is another flashpoint. Ethio Telecom’s Telebirr platform allegedly receives preferential treatment in government transactions, while Safaricom’s M-Pesa faces access blocks. This raises concerns about market fairness and the politicization of digital finance.
The World Bank's report identifies fundamental issues within the market structure that favor the dominant state-owned company, Ethio Telecom.
Insufficient regulatory oversight is allowing unfair practices to persist, creating an uneven playing field for competitors.
"The planned level playing field has yet to fully materialize," the report states. "Key asymmetries persist, notably the fact that Ethio Telecom was not required to pay the US$1 billion license fee imposed on Safaricom Ethiopia. Ethio Telecom has also been designated as holding Significant Market Power (SMP) in six market segments, compared to just one for Safaricom."
In addition, Ethio Telecom has been pricing voice calls below the mobile termination rate (MTR) set by the regulator. As a result, Safaricom incurs losses on every call made to Ethio Telecom customers, as it must match these below-cost prices to remain competitive.
The report also raises concerns about potential cross-subsidization within Ethio Telecom's revenue streams, the limited enforceability of SMP regulations, and possible preferential treatment for state-owned enterprises, particularly in the handling of government mobile money transactions.
One recent and troubling development cited is Ethio Telecom's alleged blocking of access to Safaricom applications, including M-Pesa, potentially undermining consumer choice and innovation.
Despite Ethiopia’s ambitious telecom reforms, the promised level playing field has yet to materialize fully. A major point of contention lies in the unequal licensing conditions. While Safaricom Ethiopia paid a total of US$1 billion to enter the market, the state-owned Ethio Telecom was not subject to the same licensing fees. This foundational disparity has contributed to significant structural imbalances.
The World Bank notes that these issues merit further investigation by national regulatory authorities.
“This means that Safaricom loses money on every single call made to EthioTel customers, as it needs to match EthioTel prices.”
“While the telecom reforms have delivered notable improvements, expanding broadband access and lowering mobile service prices, significant challenges remain. Ethiopia continues to struggle with universal broadband penetration, network quality, affordability, and equitable regional access,” says the report.
At around US$1 per user per month, Ethiopia’s average revenue per user (ARPU) is among the lowest in Africa, limiting the financial viability of further network investment.
The country also continues to lag behind many of its peers in 4G coverage, broadband speed, and fixed internet penetration, particularly in rural and underserved areas, although the digital divide has narrowed since 2018.