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Ethiopia: Ethio Telecom in Talks with Chinese Firm for Hyperscale Data Centre Development

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The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, has confirmed that the Monetary Policy Committee’s (MPC) decision to further tighten the Monetary Policy Rate (MPR) was unanimously supported. Cardoso, who also chairs the MPC, made this announcement on Tuesday in Abuja while delivering the communique from the committee’s 297th meeting. Out of the 12-member committee present, 11 voted in favor of raising the interest rate. This marked the fifth consecutive hike, with the MPR increasing by 50 basis points, moving from 26.75% to 27.25%. In addition to the interest rate hike, the MPC also raised the Cash Reserve Ratio (CRR) for Deposit Money Banks by 500 basis points, increasing it from 45% to 50%. The CRR for merchant banks was similarly raised by 200 basis points, from 14% to 16%. The committee chose to retain the asymmetric corridor around the MPR at +500/-100 basis points, while keeping the Liquidity Ratio unchanged at 30%. "The Committee observed a moderation in year-on-year headline inflation for July and August," Cardoso noted. "Moreover, the relative stability and convergence in the exchange rate across various market segments, driven by the CBN’s tight monetary stance, is expected to enhance confidence and enable economic agents to plan for the medium to long term." Despite the positive developments, Cardoso emphasized that the committee recognized the need for further actions to fulfill the CBN’s price stability mandate. Rising Inflation Concerns The committee expressed concern over persistent inflationary pressures. While food inflation showed signs of moderation, core inflation remains elevated, primarily driven by increasing energy prices. This trend, according to Cardoso, poses significant challenges and requires coordinated efforts with fiscal authorities to address rising energy costs. The MPC also discussed the necessity of mopping up excess liquidity, managing foreign exchange demand, and tackling the growing fiscal deficit. However, the committee ruled out the possibility of resorting to the "Ways and Means" financing option to address the deficit. Liquidity and Fiscal Deficit Management Cardoso noted that the continued growth in money supply necessitates actions to control excess liquidity in the system, especially in relation to foreign exchange demand. The committee also highlighted concerns over the increasing fiscal deficit but acknowledged the fiscal authority’s commitment to avoid monetary financing through Ways and Means. Ethio Telecom in Talks with Chinese Firm for Hyperscale Data Centre Development
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Ethio Telecom is in discussions with a Chinese firm to develop a hyperscale data centre as part of its efforts to bolster Ethiopia’s digital infrastructure. This initiative follows the conclusion of the telecom giant’s 2023/24 fiscal year (July 1, 2023, to June 30, 2024), during which it saw significant growth, including an 8.9% rise in its subscriber base, reaching 78.3 million customers, and a 21.7% increase in total revenue, amounting to Birr 93.7 billion ($1.62 billion).

A standout performer has been Ethio Telecom’s mobile money service, Telebirr, which now has 47.5 million subscribers, representing 45.7% of all mobile money users in Ethiopia. Over the past year, Telebirr facilitated transactions worth Birr 1.81 trillion ($31 billion).

Ethio Telecom highlighted the importance of the planned hyperscale data centre in supporting Ethiopia’s digital transformation. “The hyperscale data centre will be a critical component in building Ethiopia’s digital economy by offering scalable, reliable, and future-proof digital infrastructure,” the company said.

The telecom company continues to seek strategic partnerships that align with its Lead Growth Strategy and the broader “Digital Ethiopia” vision. “These partnerships are essential for driving innovation and creating a robust ecosystem for Ethiopia’s digital future,” Ethio Telecom added.

This is not Ethio Telecom’s first foray into data centre development. In 2022, the company signed a lease agreement with Amhara Bank for one of its data centres, and it currently operates two modular data centres, with three more under construction, soon bringing the total to five.

Looking ahead, Ethio Telecom has set ambitious targets for the upcoming fiscal year. CEO Frehiwot Tamru revealed plans to achieve a 75% revenue increase, aiming for Birr 163.7 billion ($1.44 billion) in sales by July 2024. The company also seeks to expand its customer base by 6%, with a focus on enhancing its enterprise solutions and introducing more services to its mobile money platform, Telebirr, to improve accessibility across Ethiopia.

These initiatives are expected to play a key role in driving Ethio Telecom’s growth and supporting the digital economy in Ethiopia.

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