An assessment of level of service quality and customer satisfaction the case of ethio telecom

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ABSTRACT
The purpose of this quantitative descriptive research study was to assess the level of
service quality and to identify the most important service quality dimensions that
influence overall customer satisfaction. Five dimensions of the SERVPERF scale
namely; tangibles, reliability, responsiveness, assurance and empathy were used to
measure the perceptions of customers of Ethio Telecom. The research was conducted
using data collected through a survey of enterprise customers in Addis Ababa. 220
questionnaires were sent to the sample of the study and 170 usable questionnaires
were obtained with a response rate of 77%. The findings revealed that three of the
service quality dimensions: reliability (t-value= 4.06 p <.001) empathy (t-value= 3
p<.005) and tangibles (t-value= 2.129 p<.005) influence the dependant variable overall
customer satisfaction. The findings also indicated that overall service quality was found
to be influenced by four of the five service quality dimensions namely, reliability (tvalue= 4.684 p <.001), empathy (t-value= 3.05 p<.005), responsiveness (t-value= 2.187
p<.005) and tangibles (t-value= 2.0 p<.005). Reliability, empathy and tangibles were
found to be predictors across both overall service quality and customer satisfaction. The
study recommends Ethio Telecom to concentrate on these dimensions to achieve
overall customer satisfaction and improve overall service quality.

ii

ACKNOWLEDGEMENTS
I would like to express my very great appreciation to my supervisor, Mr Abdurezak
Mohammed Kuhil for his valuable and constructive comments during this research
study.
I would also like to thank the staffs of Ethio Telecom at Enterprise Division for providing
me the relevant data. I would also like to extend my thanks to fixed access network
technicians at West and Central Addis Ababa Zones for their help in collecting data.
To the respondents who participated in the survey I could not have done this without
you. I appreciate the time and effort you put into this study.
Finally, I wish to thank my wife, Maheder Getachew and my children for their
understanding, support and encouragement throughout my study.

iii


Table of Contents
Abstract....................................................................................................................................... ii
Acknowledgements .................................................................................................................... iii
LIST OF TABLES ..................................................................................................................... vii
LIST OF FIGURES .................................................................................................................. viii
Chapter 1 : ORIENTATION ........................................................................................................ 1
1.1. Introduction and Background to the Study ....................................................................... 1
1.2. Statement of the Problem ................................................................................................ 2
1.3. Purpose of the Study ....................................................................................................... 3
1.4. Objectives of the Study .................................................................................................... 3
1.5. Research Questions ........................................................................................................ 3
1.6. Delimitation and Scope of the Study ................................................................................ 4
1.7. Significance of the Study ................................................................................................. 4
1.8. Limitations of the study .................................................................................................... 4
1.9. Assumptions .................................................................................................................... 4

1.10. Definitions of Terms ....................................................................................................... 5
1.11. Structure of the Thesis................................................................................................... 6
Chapter 2 : TELECOMMUNICATIONS IN ETHIOPIA ................................................................ 8
2.1. Introduction...................................................................................................................... 8
2.2. Social, Economic and Political Overview ......................................................................... 8
2.3. The Telecommunications Industry ..................................................................................10
2.3.1. History......................................................................................................................11
2.3.2. Telecommunications Regulation ..............................................................................13
2.3.3. Ethio Telecom ..........................................................................................................14
2.4.1. Strategic Directions ..................................................................................................25
2.4.2. Objectives ................................................................................................................26
2.4.3. Major Targets ...........................................................................................................27
iv


2.4.4. Implementing Strategies...........................................................................................27
2.5. Summary ........................................................................................................................28
Chapter 3 : Literature Review and Theoretical Framework ........................................................29
3.1.

Introduction .................................................................................................................29

3.2.

Characteristics of services ..........................................................................................29

3.3.

Perceived Service Quality ...........................................................................................30

3.2.1. Disconfirmation paradigm.........................................................................................32
3.2.2. Performance-based paradigm ..................................................................................32
3.2.3. Conceptual Models of Service Quality ......................................................................33
3.2.4. The Perceived Service Quality Model.......................................................................33
3.2.5. The ‘Gaps’ model of service quality ..........................................................................34
3.2.6. Performance only model ..........................................................................................39
3.3. Service Quality Studies in Telecommunications..............................................................42
3.4. Customer Satisfaction.....................................................................................................45
3.5. The Relationship between Perceived Service Quality and Customer Satisfaction.........47
3.6. Theoretical Framework ...................................................................................................48
3.7. Summary ........................................................................................................................49
Chapter 4 : RESEARCH Methodology ......................................................................................51
4.1. Research Method & Design ............................................................................................51
4.2.

Population and Sample ...............................................................................................52

4.3.

Survey Instrument and Data Collection .......................................................................53

4.4.

Measurement of Variables ..........................................................................................54

4.5.

Data Analysis ..............................................................................................................54

4.6.

Reliability and Validity .................................................................................................55

4.7.

Ethical Considerations ................................................................................................56

4.8.

Summary ....................................................................................................................56

Chapter 5 : RESEARCH RESULTS ..........................................................................................57
v


5.1. Sample Demographics ...................................................................................................57
5.1.

Findings Regarding validity and reliability of SERVPERF instrument ..........................59

5.1.1.

Factor Analysis ....................................................................................................59

5.1.2.

Reliability .............................................................................................................60

5.2.

Descriptive Statistics of Research Variables ...............................................................62

5.3.

Correlation Analysis ....................................................................................................67

5.3.1.

Relationships among service quality dimensions .................................................68

5.3.2.

Relationship between service quality dimensions and Overall Service Quality .....69

5.3.3.

Relationship between service quality and Overall Customer satisfaction .............69

5.3.4.

Relationship between Overall service quality and Overall Customer satisfaction .69

5.4.

Multiple Regression Analysis ......................................................................................70

5.5.1

Modelling Overall Customer Satisfaction .................................................................70

5.5.2

Modelling Overall Service Quality ............................................................................71

5.5.

Summary ....................................................................................................................72

Chapter 6 : DISCUSSION CONCLUSIONS AND recommendations .........................................73
6.1. Discussion ......................................................................................................................73
6.2. Conclusions and Recommendations...............................................................................76
References ...............................................................................................................................80
APPENDIX A-SURVEY INSTRUMENT.....................................................................................88
Appendix B- Factor Analysis .....................................................................................................93
Appendix C- Cronbach’s alpha coefficient .................................................................................94
Appendix D-Correlations ...........................................................................................................98
Appendix E- Regression ...........................................................................................................99

vi


LIST OF TABLES
Table 2-1: Evolution of the Telecom industry-Important Milestones...................................11
Table 2-2: GTP Targets ...........................................................................................................27
Table 3-1: Service quality studies in the telecommunications industry .............................44
Table 5-1: Demographic Profile of Respondents ..................................................................58
Table 5-2: KMO and Bartlett’s Test ........................................................................................60
Table 5-3: Total Variance Explained ......................................................................................60
Table 5-4: Reliability Statistics ...............................................................................................61
Table 5-5: Reliability Statistics of Service Quality Dimensions............................................62

Table 5-6: Mean and Standard Deviation Scores for Perceived Service Quality Items ......63
Table 5-7: Descriptive Statistics service quality dimensions ..............................................65
Table 5-8: Descriptive Statistics Overall Service Quality .....................................................66
Table 5-9: Overall Service quality..............................................................................................66
Table 5-10: Descriptive statistics of Overall Customer Satisfaction ..................................67
Table 5-11: Overall Customer Satisfaction ............................................................................67
Table 5-12: Correlations among service quality dimensions ...............................................68
Table 5-13: Correlation Coefficients between Dependant and Independent Variables ......69
Table 5-14: Correlations between Dependant Variables ......................................................70
Table 5-15: Multiple Regression Analysis Predicting Overall Customer Satisfaction In
Terms of Service Quality Dimensions ...................................................................................71
Table 5-16: Multiple Regression Analysis Predicting Overall Service Quality In Terms of
Service Quality Dimensions ...................................................................................................72

vii


LIST OF FIGURES
Figure 2-1: Gross Domestic Products, National Currency .................................................... 9
Figure 2-2: eTOM Framework .................................................................................................16
Figure 3-1: Perceived Service Quality ...................................................................................31
Figure 3-2: The Grönroos perceived service quality model .................................................34
Figure 3-3: The ‘Gaps’ model of service quality ...................................................................36
Figure 3-4: The service quality dimensions ..........................................................................38
Figure 3-5: Conceptual model of service quality and service satisfaction ........................46
Figure 3-6: Factors that Affect Customer Satisfaction .........................................................47
Figure 3-7: Conceptual Framework .......................................................................................49

viii

CHAPTER 1 : ORIENTATION
1.1. Introduction and Background to the Study
The contribution of service sector to the development of most countries is increasing
from time to time. Ethiopia too experienced a growth in the services sector in the last
few years. The contribution of the service sector to overall Gross Domestic Product
(GDP) increased from 39.7% in 2009/2010 to 46.6% in 2010/11 (MOFED, 2011). One of
the most important service sector in Ethiopia is telecommunications.
In Ethiopia, telecommunication services investment is reserved for the government or a
joint venture (domestic or foreign) with the government (Proclamation No. 280/2002).
However, down-stream activities of telecommunication (resale and tele-centre services,
installation and maintenance of cables, wireless local loop, and virtual Internet Service
Providers-ISPs)

are

open

for

domestic

investors.

Global

Mobile

Personal

Communication by Satellite (GMPCS) is allowed for both domestic and foreign
investors.
Ethiopia remains the last country in Africa to allow a national monopoly on all telecom
services including fixed, mobile, Internet and data communications (Business Wire,
2012). Ethio Telecom is the sole provider of telecommunication services in the country.
It provides fixed, mobile, and Internet services and maintains the international gateway.
The government of Ethiopia has recognized telecommunications sector as an important
tool for socioeconomic development. Accordingly, It has invested about $1.5bn (Lishan,
2010) into fixed, wireless and mobile network infrastructure, including third generation
mobile technology, as well as a national fibre optic backbone. In addition, in 2010 the
government has outsourced the management of the incumbent for two years contract to
France Telecom (FT) to create world class telecom service provider. As of June, 2012
the company’s total subscribers in all telecom services reached 18.28 Million
().
Despite the progress achieved in introducing new services, improving penetration and
telecom infrastructure development, the quality of services has not improved. The
incumbent has always been criticised for focusing only on increasing its subscriber base
and ignoring quality of service improvement. Customers complain about poor network
1


quality, late deliveries, incompetent personnel, inconvenient service hours, poor
performance, and complicated procedures.
In today’s world of global competition, rendering quality service is a key for success,
and many experts concur that the most powerful competitive trend currently shaping
marketing and business strategy is service quality (Abdullah, 2006). Researches proved
that delivering superior service quality which results in customer satisfaction leads to the
retention of existing customers and the attraction of new ones, reduced costs, an
enhanced corporate image, positive word-of-mouth recommendations, and, ultimately,
enhanced profitability (Berry and Parasuraman 1993; Rust and Oliver 1994; Cronin,

Brady and Hult, 2000).
A customer’s perception of quality is critical to telecommunications service provider’s
long term success because of the significant influence perceived quality has on
customer satisfaction. According to Oodan, et al. (2003) customer’s perception is the
main criterion by which telecommunications service providers can assess and measure
the value of the quality they deliver. Further, the authors argue that the service
provider’s decision making would be incomplete without perceived service quality
information.
Customers in different segment have different needs, wants, perceptions, experiences
and view service quality differently (Zeithaml et al, 2001). Ethio Telecom has
categorized its customers into Residential (individual households) and Enterprise
(businesses,

government

organizations,

non-government

organizations

and

embassies). The current study focuses on an assessment of level of service quality and
satisfaction of enterprise customers as well as identifying service quality factors that
influence satisfaction of enterprise customers.
1.2. Statement of the Problem
Customers of Ethio Telecom, especially enterprise customers report a feeling of
dissatisfaction with the quality and value of the services they receive from Ethio
Telecom (Ethiopian Reporter, 2011; Fortune, 2011). A survey conducted by Horus

Telecom & Utilities S.A. in 2010 among business customers in Addis Ababa show that
75% were dissatisfied with the poor quality of fixed line service, 90% complained about

2


mobile service network problem, and 65% of respondents were dissatisfied with the
poor quality of internet and data services they receive from the service provider (Baron
2010).
Poor quality of telecom services has significant impact not only on the revenue of Ethio
Telecom but also on the competitiveness of enterprises, institutions and individuals at
all levels. In addition, this problem presents a challenge to Ethiopian government who
has invested a huge amount of money in telecommunications infrastructure expansion
and for management contract to create a world class telecom service provider.
1.3. Purpose of the Study
The purpose of the study was to assess the level of service quality and to identify the
most important service quality dimensions that influence overall customer satisfaction.
1.4. Objectives of the Study
The overall objective of this study was to assess the level of service quality and
satisfaction of enterprise/corporate customers with the services provided by Ethio
Telecom. The specific objectives of this research were:
1. To identify level of service quality as perceived by enterprise customers of Ethio
Telecom.
2. To examine whether a relationship exists between perceived service quality and
overall customer satisfaction in Ethiopian telecom.
3. To identify the most important perceived service quality dimensions that influence
overall service quality and customer satisfaction.
4. To assess an overall customer satisfaction level of enterprise/corporate
customers of Ethio Telecom.
5. To make recommendations based on the results of the study.

1.5. Research Questions
To achieve the objective stated above, the researcher has raised the following research
questions:
1. What are the levels of perceived service quality and overall satisfaction of
enterprise customers of Ethio Telecom?
3


2. What is the relationship between perceived service quality dimensions and
overall customer satisfaction?
3. How significant are the identified service quality dimensions in predicting
customer satisfaction and overall service quality?
1.6. Delimitation and Scope of the Study
•

This study covered only enterprise or corporate customers of Ethio Telecom in
Addis Ababa. All residential customers of the company and enterprise customers
outside Addis Ababa were not included in the research.

•

The study will be based on performance perception-SERVPERF (Cronin and
Taylor, 1992) as a measure of service quality.

1.7. Significance of the Study
The study has identified which dimensions of service quality were important to
enterprise customers. This can be used by Ethio Telecom to commit resources to
quality improvement in areas that have greater influence on customer satisfaction. This
study also helps for further research in the area that is not covered in this research i.e.
factors such as technical quality, brand image, price, and complaint handling.

1.8. Limitations of the study
The study focused only on enterprise or corporate customers of Ethio Telecom in Addis
Ababa city. Because of resource constraints this study didn’t assess the perceptions of
enterprise customers of different geographic regions and residential customers.
Survey research has been employed in this study. Therefore, limitations attributed to
survey research may influence the results due to potential problem areas which include
ensuring that the questions are clear and not misleading
1.9. Assumptions
The study targeted participants who were assumed to provide honest answers to the
survey questions. The respondents were also assumed to complete the surveys based
on their own perceptions regarding service quality without any input from others.

4


Further, the participants were also assumed to be representative of enterprise
customers in Addis Ababa City.
1.10. Definitions of Terms
Assurance: is defined as the “knowledge and courtesy of employees and their ability to
inspire trust and confidence” (Parasuraman et al., 1988, p. 23). In this study, assurance
is the understanding and politeness of Ethio Telecom employees and their capability to
encourage trust and confidence as perceived by Ethio Telecom customers. Assurance
is measured using 4 items of the assurance dimension of the 22-item SERVPERF.
Availability: Availability is the likely-hood with which the relevant components of the
service function can be accessed for the benefit of the customer at the instant of
request (Oodan et al. 2003).
Customer satisfaction: Customer satisfaction is the degree to which a customer
believes that the use of a service evokes positive feelings (Rust & Oliver, 1994).
Empathy: Empathy occurs when a service provider demonstrates concern and care for
the individual needs and interests of customers, including convenient hours of operation

and effective communication channels to customers (Parasuraman et al., 1988). In this
study empathy is the caring and individualized attention that Ethio Telecom provides its
customers. It is measured using 5 items of the empathy dimension of the 22-item
SERVPERF.
Enterprise customers (operational definition): Enterprise customers are companies,
government organizations, embassies and cooperatives who account for a major part of
service provider’s businesses.
Reliability: Reliability is the fulfilment of the service provider’s promises to customers
such as the service function will perform within the specified limits of speed, accuracy or
availability for 24 hours a day and providing the appropriate service dependably and
accurately (Parasuraman et al., 1988). In this study, reliability is the ability of the service
provider to execute the promised service as perceived by the customers.

This is

measured using 5 items of the reliability dimension of the 22-item SERVPERF.

5


Responsiveness: Responsiveness is the service provider’s prompt reaction to
customers’ needs (Parasuraman et al., 1988). In this study, responsiveness is the
readiness of the Ethio Telecom to provide prompt services as perceived by customers.
This is measured using 4 items of the responsiveness dimension of the 22-item
SERVPERF.
Service quality: Service quality is the “global judgment, or attitude, relating to the
superiority of the service” (Parasuraman et al., 1988).
Service provider (operational definition): In this study, service provider is defined as
Ethio Telecom employees who work closely with customers to facilitate and
accommodate customers’ needs while they are using the company’s services.

Customers rate their perceptions of the service quality of this service provider
Tangibility: Tangibility is the visual appearance of the facility, equipment, and
personnel of the service provider (Parasuraman et al., 1988). In this study, tangibles
are facilities of Ethio Telecom as perceived by the customers. This is measured using 4
items of the tangible dimension of the 22-item SERVPERF.

1.11. Structure of the Thesis
The structure and content of this thesis is divided into six chapters as follows:
•

Chapter one serves as an introduction and orientation to the research under
review and it gives a broad outline of the background to the study, the problem
statement, the purpose and objectives of the study and the research questions.
The delimitations and scope of the study, significance of the study, limitations,
and assumptions are included. The definitions of key terms are presented and
finally the structure of the thesis is outlined.

•

Chapter two provides an overview of the telecommunications industry in Ethiopia.

•

Chapter three provides a comprehensive review of literature and theoretical
frame work of the study.

•

Chapter four provides a full exposition of the research design and methodology.

•

Chapter five provides data analysis and presentation of the research findings of
this study.

6


•

Chapter six discusses the outcome of the study, its conclusions, and
recommendations.

1.12. Summary
This chapter has provided the introduction and orientation of the research under review.
The research problem and research questions were posed, and presented. The
delimitations and scope of the study were identified. Definitions of terms were also
presented. Chapter 2 will provide an overview of the telecommunications industry in
Ethiopia.

7


CHAPTER 2 : TELECOMMUNICATIONS IN ETHIOPIA
2.1. Introduction
After discussing the background to the study, the problem statement, significance of the
study, delimitation and scope of the study in chapter one, this chapter aims at reviewing
telecommunication industry in Ethiopia. Thus, the first section focuses on the social,
economic and political background of the country. The second section provides a brief
analysis of the telecommunications industry. This discussion will be complimented with

a discussion on the history of telecommunication industry, telecommunications
regulation, and the service provider (Ethio Telecom). Finally, the third section presents
the country’s five years Growth and Transformation Plan (GTP)2010/11 to 2014/15 in
telecommunications sector.
2.2. Social, Economic and Political Overview
Ethiopia is part of the East African region commonly referred as the “Horn of Africa.”
Situated between 3°30´ and 15º North latitude and 33° and 48° East longitude, it covers
an area of approximately 1.13 million km². Bordered by Somalia and Djibouti to the east,
the Sudan on the west, Eritrea to the north, and Kenya to the south, Ethiopia is a landlocked country. Ethiopia is one of the biggest in size and the second most populated
country in Africa with a population of nearly 84 million (US State Department, 2012).
Economic Overview
Until recently, agriculture (mainly smallholder farming and livestock production) was the
dominant sector in the economy. While the services sector has recently outstripped
agriculture in terms of its share of GDP (currently estimated at 46%) agriculture remains
critical for broad-based growth. The agriculture sector accounts for 42% of GDP, 80% of
employment and 85% of Ethiopia‘s export earnings (African Development Bank, 2011).
However, the impact of its ICT sector remained relatively small – the ICT sector
contributes less than 2% to the economy. It is low in comparison to the regional
average, which is around 4% (Lishan, 2010).
The IMF has forecasted that growth in Ethiopia's economy over 2011-2105 will average
8.1% a year, the third highest rate in the world after China and India. Ethiopia’s policy
makers, aim for 11% annual growth for the same period, are working on infrastructure
8


projects worth tens of billions of dollars. GDP is set to grow to Birr 919bn ($45.8bn) by
2015. Although income (GDP) per capita at current prices was only $342 in 2011 (down
from $350 in 2010 and $389 in 2009 due to population growth), it is forecast to grow
swiftly, to $480 by 2015 (African Business, 2011).
The Ethiopian Economy has revealed double digit economic growth for the past

consecutive years. Based on the targets of the five years 2010/11-2014/15 Growth and
Transformation Plan (GTP), growth is expected to continue at a double-digit rate,
exports are projected to rise significantly, and some degree of transformation is
anticipated in all three major sectors of the economy—agriculture, industry and
services. To highlight the most notable targets of the GTP, the macroeconomic
environment is projected to show: growth of 11 percent per year (14 percent per year
under a high-case scenario); rising domestic savings -from 7.4 to 15 percent of GDP;
rising investment from 22.8 to 28.2 percent of GDP (MoFED, 2010).

Data Source: International Financial Statistics (IFS)
Data Extracted from IMF Data Warehouse on 10/5/2012

Figure 2-1: Gross Domestic Products, National Currency
9


Social Overview
In recent years, there have been improvements in human development in several areas,
including raising school enrolment and improving health and sanitation and water supply
services. Despite these positive developments, Ethiopia’s human development index
continues to be lower than that of most Sub Saharan African countries. The United
Nations Development Program’s Human Development Report of 2011 ranks Ethiopia
174th out of 187 countries in Human Development Index (Human Development Report,
2011).
Political Overview
Ethiopia is a federal republic under its 1994 constitution. The executive branch includes
a president, Council of State, and Council of Ministers. Executive power resides with the
prime minister; therefore decisions with regards to the communications sector come
from him.
Ethiopia promotes a policy of ethnic federalism, dissolving significant powers to

regional, ethnically based authorities. The country has nine ethnically-based semiautonomous administrative regions and two special city administrations (Addis Ababa
and Dire Dawa), which have the power to raise their own revenues. Considerable
administrative power is devolved to the regions and down to the district level. The
communication sector is regarded as a national strategic asset, therefore planning of
the telecom sector has little input from these regions and districts (Lishan, 2010).
2.3. The Telecommunications Industry
Globally, the development of telecommunication industry is one of the most important
indicators of social and economic development of a given country. In addition to this, the
development of communication sector plays a vital role in overall development of all
sectors related to social, political and economic affairs. The World Bank (2009) report
indicated that for every 10 percentage points of increased penetration, annual GDP
growth increased between 0.7 and 1.4 percent for fixed, mobile, internet, and
broadband services.

10


2.3.1. History
Telecommunications in Ethiopia is more than a century old, and the first time a small
telephone network was established was in the year 1894. It was used to be
administered under the Ministry of Posts Telephone and Telegraph until 1952. Then, it
was later separated from posts and became an autonomous entity under the Ministry by
the enactment of Telecommunication Proclamation No. 131 of 1952. By this
proclamation, a telecommunication entity, called "Ethiopian Telecommunication Board"
which exclusively regulates and operates telecommunication services was established.
Without

affecting

its

functions,

the

name

was

later

changed

to

Ethiopian

Telecommunication Authority. The Ethiopian Telecommunication Authority was working
on an exclusive basis as an operator and regulator
As the historical development process of the communication industry, the sector
demanded the importance of the separation of the telecom policy, regulation and the
operation. The government of Ethiopia by proclamation No. 49/1996 (latter amended by
proclamation No. 281/2002) established a separate federal telecommunication
regulatory entity called Ethiopian Telecommunication Agency (ETA). The government
owned operator known as the Ethiopian Telecommunication Corporation (ETC) was
also established by Council of Ministers Regulation No. 10/1996. In 2010, ETC
establishment Council of Ministers Regulation No. 10/1996 was repealed and Ethio
Telecom was established as a National Telecommunications Service provider by
Council of Ministers Regulation No. 197/2010. Both, the regulator and operator are
accountable to the same body: Ministry of Information and communication Technology.

Table 2-1: Evolution of the Telecom industry-Important Milestones

Year
Work commenced on long distance telephone line between Harrar and
1894 Addis Ababa.
The Harrar-Addis Ababa telephone line completed. Dire Dawa-Djibouti
1897 telephone line work had been started.
1902

The Addis Ababa-Asmara telephone line work had been started.

1905 The 880-kilometer Addis Ababa-Asmara telephone line had been
11


completed.
1906 The Dire Dawa-Djibouti telegraph had been completed.
1907 Emperor Menelik advocated Ethiopia’s membership of the International
Telecommunications Union (ITU).
The Addis Ababa telephone exchange begun to serve some 100
1914 subscribers.
Ethiopia participated in the general assembly of the international Postal,
1920 Telegraph and Telephone service held in Madrid, Spain.

The Ethiopian Government signed a contract agreement for the building
1931

of a radio transmission and reception station.
Ethiopia has become member of the International Telecommunication

1932 Union (ITU).
A radio-telephone station set up within the compound of the old post office
1933 linking the country with Cairo, Djibouti and Aden.
1934 170 towns and villages become the beneficiaries of telephone services
The invading fascist Italian forces destroyed most of Ethiopia’s
communication lines. A 1,500 line capacity automatic telephone exchange
1941 was installed in Addis Ababa.
Establishment of Imperial Board of Telecommunications of Ethiopia being
1952 separated from the Ethiopian Postal Services.
1975 The organization was renamed as “Provisional Military Government of
Socialist Ethiopia Telecommunications Service”.
1979 Establishment of Sululta Satellite Earth Station began operation.
The Organization was renamed as “Ethiopian Telecommunication
Authority”. The Addis Ababa- Debre Markos- Bahr Dar- Gondar microwave
1981 line became operational.
1987

The second Sululta Satellite Earth Station began operation.
Digital exchanges went operational in Addis Ababa and other major towns

1988 for the first time.
12


1990 A Domestic Satellite Earth Station went operational.
1996 Ethiopian Telecommunications Corporation established as a Corporation.
1997

Internet Service was introduced - Ethio Internet established.

1999

Mobile Telephone Service was launched- Ethio Mobile established.

2001 Virtual Telephony Service was introduced.
2001 Digital Data Network Service was introduced - Ethio Stream established.
2003 Smart Calling cards introduced.
2003

International Mobile Roaming Service was realized.

2003

Satellite Mobile Service was launched.

2003

Pre-paid mobile system introduced.

2004

ETC commenced Broadband Multi-media services.
The first phase of nationwide installation of about 4000 km long Optical
Fiber Network Across to six directions of the country from the metropolis to
Dire Dawa- Djibouti, Dessie- Mekele, Bahir Dar- Nekemte, Jimma and

2005 Awassa was started.
The six digits fixed line and mobile telephone numbers have been changed
2006

to seven digits and the area codes from two to three digits
.
Next Generation Network (NGN) of fixed telephone line, Third Generation
Network (3G) of mobile service based on Wide Band Code Division
multiple access (WCDMA) and dense wavelength division Multiplexing

2007 (DWDM) based optical fiber transmission were introduced in Ethiopia.
2010

Ethio Telecom was established on Monday 29th November 2010.

Source: />2.3.2. Telecommunications Regulation
The Ethiopian Telecommunication Agency (ETA) is institutionalized with the objectives
of promoting the development of high quality, efficient, reliable and affordable
telecommunication services in the country. The establishment of ETA is to

13


institutionalize the implementation of government policies and directives. To this end,
the following main Powers & Duties are given by the law to the ETA.
•

To specify technical standards and procedures for the provision of
telecommunication services;

•

To ensure that telecommunication services conform to the specified standards of
quality;

•

To regulate tariffs relating to basic telecommunication services;

•

To license and supervise operators of telecommunication services;

•

To regulate types of telecommunication equipment which may be connected to a
telecommunication system;

•

To authorize and supervise the use of frequencies allotted to Ethiopia

Accordingly, it has issued license to Ethio Telecom, to provide fixed, mobile and Internet
services on an exclusive basis in exchange for efficiency and quality of service
requirements and infrastructure expansion targets. Furthermore, ETA has also
performed quality control activities and has started evaluating the operator's
performance on the basis of the license agreement.
ETA has been setting and approving standards for telecommunication equipment. In
addition, since its establishment ETA has been allocating frequency for spectrum users.
As per the amended proclamation No. 281/2002, the Agency is issuing licenses for the
private sector on telecommunication services such as resale, cabling, terminal
equipment maintenance and exchange
2.3.3. Ethio Telecom

Ethio Telecom is the sole provider of telecommunication services
in Ethiopia. It provides fixed, mobile, and Internet services and maintains the
international gateway. Ethiopia remains the last country in Africa to allow a national
monopoly on all telecom services including fixed, mobile, Internet and data
communications (Business Wire, 2012).
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Despite pressures from international financial institutions, Ethiopia’s telecom market
structure has continued to be state-owned. Close observation also shows that it is
unlikely that liberalization will take place in the short term. According to Lishan (2010)
Telecommunications is viewed as a strategic asset for the economy and national
security in the horn of Africa country. Another obvious reason why the government
would like to hold on to the state-owned enterprise is its interest in recouping the
massive investment it made in recent years and repay the US$1.5 billion loan. The
government has sunk so much borrowed capital into the network that it is highly riskaverse and therefore likely to maintain the status quo (Lishan, 2010). He further notes
that policy makers of the country argue “liberalization will not result in positive universal
access to the poor people due to the profit motives of the multinational companies that
are interested in the cream telecom market”.
The purposes of EthioTelecom’s establishment are stated in Article 5 of Council of
Ministers Regulation No. 197/2010:
1. To provide and make accessible Next Generation Network based world class
standards information technology services;
2. To build competent Next Generation Network based workforce with appropriate
knowledge, skill, attitude and work culture to provide world class telecom service;
3. To engage, in accordance with development policies and priorities of the
government, in the construction, operation, maintenance and expansion of
telecommunications networks and services;
4. To provide domestic and international voice, data, video and other related value
added services;

5. To provide communication services using integrated information technology
platform, including rebroadcast television services;
6. In line with directives and policy guidelines issued by the Ministry of Finance &
Economic Development, to sell and pledge bonds, to negotiate and sign loan
agreements with local and international financial services;
7. To engage in other related activities necessary for the attainment of its purposes.
To ensure that Ethio Telecom runs parallel with top telecom operators, the Ethiopian
government has reached an agreement with France Telecom, one of the world’s leader
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telecommunications company. This agreement has helped Ethio Telecom to improve its
management capability through the transfer of world-renowned know-how and skills.
Accordingly, Ethio Telecom is now trying to adopt Enhanced Telecom Operations Map
(eTOM) business framework for the business process management. The Enhanced
Telecom Operations Map® -eTOM (see Figure 2-2) has been developed by the Tele
Management Forum as a reference framework for categorizing all the business
activities that a service provider will use. It describes all the enterprise processes
required by a telecommunications service provider and analyses them to different levels
of detail according to their significance and priority for the business (ITU-T Rec.
M.3050.1, 2004).

Source: ITU-T Rec. M.3050.1, 2004

Figure 2-2: eTOM Framework
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Company Strategy
Ethio Telecom will achieve its goal of both providing a reliable network and of

improving customer services through a range of different levers that are part of
its development strategy.
Ethio Telecom will develop and enhance the information system. This will help to
decrease the delay for provision, sales and activation as well as to provide more
reliable information to customers.
Ethio Telecom will develop a world-class human resources management. This
will help to improve employees’ ability to meet the needs and expectations of
customers.
Ethio Telecom will implement control standard processes. This will help to
increase reactivity and to faster customer access to services.
Ethio Telecom will develop better sourcing & facilities processes to speed the
day to day operational activities. This will help to faster delivery and repair and
will offer more transparency to customers.
Source: />Company Objectives
In line with its mission, Ethio Telecom has ambitious goals:
being a customer centric company
offering the best quality of services
meeting world-class standards
building a financially sound company
To reach these goals, all our divisions focus on:
developing and enhancing network and information system
ensuring easy access and coverage to the whole population
creating a strong brand
developing human resources management
implementing control standard processes
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