June 18, 2019 / 4:56 PM / a month ago

Internet blackout hits Ethiopia's pocket, but not seen deterring telecoms investors

ADDIS ABABA (Reuters) - An internet blackout in Ethiopia last week cost the economy millions of dollars and crippled businesses, but an analyst said it was unlikely to have a long-term impact on government plans to privatize the telecoms sector.

FILE PHOTO: A branch of state-owned Ethio Telecom is seen in Addis Ababa, Ethiopia July 26, 2018. REUTERS/Maggie Fick

The country’s only internet service provider, state-owned Ethio Telecom, cut internet access and disabled text messaging between Tuesday and Friday, without explanation.

The shutdown overlapped with a conference of multinational mobile operators. Ethiopia has one of the world’s last major closed telecoms markets, and the cash-strapped government is seeking up to $2.2 billion in private investment for a much-needed upgrade.

The previous government shut off the internet in 2017 and in early 2018 during periods of political unrest. But there were no major protests in Ethiopia last week.

Ethio Telecom apologized in a tweet for the outage but gave no other information. “I am not going to comment on anything regarding the internet shutdown,” executive director Cherer Aklilu told Reuters.

But despite the chaotic circumstances of the shutdown, the opportunity to enter an untapped market of 100 million people would be too tempting for most telecoms operators to pass up, said William Davison, an analyst at the International Crisis Group.

“It (the shutdown) will reaffirm to investors that there’s considerable unpredictability to the economic, political, and security environment in Ethiopia,” he said. “But these hopefully short-term problems are unlikely to significantly discourage their interest in the long-term market opportunities.”

The shutdown battered the business sector.

“We’re estimating the economic loss to Ethiopia’s GDP at some $17 million,” Alp Toker, executive director of internet monitoring group NetBlocks, told Reuters.

Hotels struggled to take bookings and host events. Endash Bogge, general manager of the Executive Hotel Adama, said takings would be down by 40%.

Daniel Tekeste, vice president of Lion International Bank, said the lender had been unable to send money and communicate with international correspondent banks.

“Our customers couldn’t send us orders,” Habtamu Tadesse, CEO of ZayTech IT Solution, behind mobile ride-hailing firm ZayRide, said. “We lost more than 2.4 million birr ($83,000) in commission.”

Additional reporting by Maggie Fick; writing by Omar Mohammed; editing by Katharine Houreld and John Stonestreet

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