As Ethiopia prepares to welcome its second national operator, Ethio Telecom is enjoying being the only player allowed to launch a mobile money service
Reports suggest that Ethio Telecom’s newly launched mobile money service, TeleBirr, has accrued over one million mobile subscribers just one week after launch.
The service, launched on the 11th of May, will allow customers to make cashless transactions using their mobile device, including sending and receiving money, depositing and withdrawing cash from selected locations, paying bills, and receiving cash sent from abroad.
That TeleBirr has generated such interest in such a short amount of time is not all that surprising. Ethiopia has a huge, untapped population and though internet and mobile penetration remains relatively low – around 20% and less than 40%, respectively, according to 2021 data from DataReportal) – penetration is growing rapidly. A similar story can be found throughout sub-Saharan Africa, producing an environment where subscribers are increasingly reliant on mobile money services for their financial needs.
“Sub-Saharan Africa will have more than 130 million new subscribers by 2025, half of which will come from just five markets, including Ethiopia,” said GSMA’s acting head for sub-Saharan Africa Angela Wamola.
In fact, Africa is already replete with successful mobile money success, with Safaricom’s M-Pesa platform perhaps the most well-known, currently processing around half of Kenya’s GDP every year.
Perhaps this extraordinary precedent is why Ethio Telecom has forecast enormous growth for its own platform, with hopes for TeleBirr to attract 21 million users in the first year and ultimately to process up to 50% of the country’s economic output.
TeleBirr is set to be linked with national banks in the coming weeks.
The potential to launch mobile money services was, a major factor in various companies bidding to be allocated one of the two new telecoms licences that Ethiopia’s regulator is making available. However, at the end of last year it was announced that the new telecoms players would not be allowed to launch their own financial services, a revelation that seriously hamstrung potential licence bidders.
Since then, it has become apparent that new telcos will, in fact, be allowed to launch their own financial services in a year’s time, giving incumbent Ethio Telecom’s TeleBirr a significant head start.
Nonetheless, the regulator ultimately still received two bids for the licences, one from South Africa’s MTN and another from a Safaricom-led consortium also including Vodafone, Vodacom, CDC Group, and Sumitomo.
The consortium’s bid of $850 million was accepted, with the collective now moving to set up an operating company to begin rolling out telecoms services in 2022. The consortium said that mobile money still has a major roll to play in its Ethiopian strategy, with a Safaricom spokesperson saying they would move to roll out the service “as soon as practically possible”.
MTN’s bid of $600 million, on the other hand, was rejected as being too low, with the regulator set to restart the bidding process in the coming weeks.
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