Telecom Liberalization in Ethiopia: Challenges and Opportunities for Local Engineering Firms in the Sector

Abstract

The purpose of this study is to examine the prospect of telecom sector liberalization on local telecom engineering firms in Addis Ababa, Ethiopia. The census method was used to collect data from 33 local telecom engineering firms. Structured questionnaires were distributed and collected from general or deputy general managers of local telecommunications engineering companies who had direct information about the prospect of telecommunication liberalization in their companies. Descriptive and relative importance index (RII) analysis methods were performed to achieve the study's intended purpose. By using the relative importance index, this study found that the biggest challenges that local firms are facing due to liberalization are a lack of clarity about how foreign firms would be involved and the unavailability of legal or political control over these foreign companies; a lack of incentives by the government to build local capacity; international standards requirements by telecommunications operators; a shortage of standard tools and equipment; and the unavailability of internationally recognized training institutions in the country. The study also identified two key opportunities for local engineering companies related to the liberalization of the telecommunications sector: the improvement of occupational health and safety through the adoption of new project management skills and the readiness of the local engineering companies to adapt to and cope with the new liberalized environment. Based on the findings, the study offered important recommendations, such as the adoption of supportive laws, regulations, and policies, as well as supportive tax and tax exemption rights for regional telecommunications firms. The main proposals include covering mandatory joint ventures between foreign and domestic businesses, defining the licensing requirements for foreign businesses, ensuring management systems, and enhancing industry-standard tools and instruments.