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Setting the IT bar ever higher

Interview - April 23, 2012
Despite holding a monopolistic position, ethio telecom maintains a competitive attitude and implements strategies and standards to welcome new investors in Ethiopia with high levels of infrastructure and services. Jean-Michel Latute, CEO of ethio telecom, shares with us the rebranding campaign of a modern telecom company
ETHIO TELECOM
JEAN-MICHEL LATUTE | CEO OF ETHIO TELECOM
Ethiopia has had an increasing GDP of more than 10% for more than 5 years now, which is foreseen to be the third-most dynamic increase after China and India till 2016. How do you explain this undergoing dynamic and how do you explain Ethiopia's growth?

I think there is a very targeted and strong investment policy, which we also find in the telecoms industry, because Ethiopia had fallen back regarding telecoms but they are catching up at a great pace. This policy can also be seen on all infrastructures in general such as electricity, dams all over the country, roads, etc. So all areas are currently being developed in Ethiopia rapidly, including telecoms, roads and electricity. I also think that there is a good management and follow up of those projects. We are currently living the change in regards to telecoms and electricity. A telecoms network functions on electricity and with fibre-optics, which are placed on electric poles owned by EEPCO. EEPCO is a very important partner in our activities. We follow their advancement and we can see their progression in parallel with that of Ethio Telecom.

The advancements that are being made in infrastructure are principally part of a growth and transformation plan for 2010-2015, which aims to double the growth by 2015. Do you believe that this is achievable and what would be the principal priorities and challenges that this plan holds?

I am going to only analyse the telecommunications aspect. We arrived in 2010 as France Telecom and Orange in Ethiopia and we created Ethio Telecom out of the former ETC, the historical operator. We arrived during the first phase of development of the telecom infrastructure. It was a huge project that gave the opportunity to increase the capacity towards 25 million users on the network and on the platforms. So that is a huge project that we arrived into since we did not manage that project. From there, our objective was to promote that network, to fill it up and make it work, to optimise it. That was the first infrastructural phase.

We are today at the eve of the second phase which means that there are decisions being made to increase our coverage from 25 to 50 million potential customers, within three to four years, which is huge. So we are going to go through the second phase in the upcoming months, which will allow us to increase the geographical coverage all over the country, which was 64% during the first phase, and which we hope will reach 85% of geographical coverage during the second phase. I am not exactly sure what percentage of the population that represents but I think it should not be far from 95%. So we are on an extremely ambitious project, which accompanies this growth.

Let’s talk a little about the ICT sector. Ethiopia started off with very low technological infrastructure for telecommunication but there has been a lot of work done in that area, enormous political plays that have been made, rigorous measures were taken to put in place stronger and widespread infrastructure. Could you give us an overview of the infrastructural level at this time and also the major achievements made?

In June 2010 there was a global penetration in the Ethiopian population of 8%. Today we are at 20%, which represents 16 million customers. So the development is essentially done through mobile networks like in many other African countries. Even though there is a static network in Ethiopia it is a bit historical and needs to be rehabilitated. This is an ongoing project. It will be used on an enterprise market and for ADSL usage so we do have a more dedicated and trustworthy Internet than the mobile network available.
From 15 million mobile customers we have 2.5 million of them who use mobile Internet, which is actually a remarkable figure; this shows that the country's culture has appropriated the Internet rather rapidly. We have 200,000 broadband customers and they are essentially enterprise and VIP customers. Otherwise, the general public connects through mobile Internet such as GPRS, EDGE and 3G, which we are currently launching. We have a strong usage between different types of networks and also connectivity to our CDMA network, which enables a user to connect to the Internet through a key that they hook up to their PC, which works very well. So we have different technologies available.

We also have rural telephony, which allows access to remote villages with lighter infrastructure. There are big projects that are currently waiting for the network to cover the whole country before they can launch. We have ongoing projects with the government that are managed by Ethio Telecom. Connections for schools and also for Waredas, through satellite for regions that are not covered by the network. After the establishment and distribution of this network we had to go out there and get customers and that is how we managed to grow from 8% to 20% within one and half years.

When we arrived there were only 2200 sales points available in the country where you could buy a SIM card or a recharge. We are currently at 22500 this month with 50 distributors; this is the key to distribution. We deal with indirect distribution in telephony. We set up our own shops. It is a new concept with our new logo and new brand that we have put in place very recently. The shop is in Sarbet and there is another one in Edna Mall. When you visit it you will be able to appreciate the level of design that is very interesting, it is all part of the image.

There is also a new work structure, which means that everyone does everything. First there is the welcome and then everyone handles every task, just like in Europe as a one-stop shopping concept. So this is the key to our success to fill up the network, it is direct and indirect distribution, but essentially indirect to be able to achieve those numbers. Commercially we have three commercial divisions that handle those tasks. This is completely new in our organisation. There is a residential division for the general public. There is an enterprise division, which is brand new and focuses on enterprises where we have two structures within. We have a structure for big enterprises and one for medium enterprises with dedicated follow up and particular follow up with resellers who are also dedicated.

We have also launched a customer service call centre. There is a front desk and a back office available. The back office deals with the handling of complaints and failure to pay bills, which is also a new service. It is also the very first call centre in Ethiopia. There are no other call centres in Ethiopia that we can really call a call centre. We have 700 people handling customer service, which is still insufficient and we need to increase that number. Within that customer service there is a dedicated phone number for corporate customers and a specific phone number for residential users. These services help create a favourable climate for businesses because we offer more than just a network.

I think that France Telecom's added value is to bring more to the table. The network was already there when we arrived. We did not build it so we are working towards optimising it. Our added value in this area is the services that we offer. Services are important for an enterprise that wants to settle here so we are very attached to what we do. So we have two domains, we have the residential where we offer access and where we need to find customers, that is our indirect network and then we have the corporate customers and the customer service is established on high service quality and high standards. We put in place a real call centre with follow up of service tickets and complaints. We have a dedicated system for the follow up of complaints. 
What do you believe to be the role of telecommunications in a country like Ethiopia?

The first role, if we look at the general public, is to establish means of communication in a country that is twice the size of France. There are still very isolated regions in Ethiopia. I think that the first objective of the Ethiopian Government is to offer equitable access to as much of the population as possible. If we want to compare the penetration with countries where there is competition available with what can be read in the media then we here believe that you need to add 40% of penetration to have the real figures. So we reach a penetration of 28%. This means that we have not reached the African standard yet but it evolves so rapidly that we will catch up quickly. So this is what I believe to be the first objective, which is to give access and telephony access within the rural countryside areas because having access to telephony in the countryside can change one's life. Instead of braving kilometres in order to find out a piece of information you would simply need to place a phone call.

The telephone tariffs are very low and that makes it easier because they are nearly the lowest prices in East Africa, which eases development. We also have a very important fibre optic infrastructure available throughout the country, which you do not find in other African countries. There was an anticipation regarding the coverage. We use 17,000 kilometres of fibre optic cable, plus 8,000 kilometres from EEPCO. One of the problems that we are facing every day is the number of fibre optic signal losses, which occur for various reasons throughout the network and are hard to manage. It forces us a little to create secure backup networks and that is what we are currently working on. Secure radio microwave signal networks to use as a backup when there is a fibre optic blackout and when we have cities, which do not have connections anymore because when we only have one fibre optic line and there is a blackout on it with no backup to roll in, we are left with nothing at all. So we are going to have a radio network which should normally end in March and that will be used as a backup. Once we solve that transmission problem for the major cities and the transmission problems that are regularly occurring between cities, which I think will be fixed very quickly, all of our products will be available.

All of the range of products will be made available in Ethiopia. From mobile Internet access to ADSL, to fibre optic connections and more. Universities are currently directly connected through fibre optic connections. These projects have been created in anticipation, and I will say anticipation because it is true that we will become a network of 23 million users when we only had a mere 7 million. Well, that may seem huge but we noticed that the network fills up quite rapidly. So I think that the anticipation regarding the investments was justified, because we are offering all these commercial services.

France Telecom took over the management of Ethio Telecoms in December 2010, and since then many improvements were made. Which accomplishments are you most proud of personally?

I think that it would be the governance. For us governance may seem natural, like for instance a different organisation, putting governance structures in place, a management council, committees that will work on the big projects, an HR committee because we are having huge HR problems and it has been a very heavy subject for us in the past months. A commercial committee because even though we have the monopoly it does not mean that we do not have competition. We had a hard time explaining this concept. We are in competition for the general public but not for the enterprises. When an end user has money in his pocket, will he chose to buy a phone card or another product? This is the reason why we launched the new brand and it is why the brand needs to be well known and recognised. It also needs to prepare the future and in the current context it needs to help us strengthen our position. So I really think that governance is essential.

When we arrived we found a company that was working mainly manually. So when you visit our shops you will see that everything has been automated and the usage of IT is at a maximum whilst the usage of paper is at a bare minimum. We installed intranet and put at their disposition modern tools. We also installed an ERP in the finance department and a financial Oracle system, which was put in place in December 2011. We are going to do the same thing for Human Resources and also for logistics because when you operate on this level that means you end up having to ship a lot of material, especially terminals. We have become distributors of all the products. Before they only sold SIM cards but now we sell everything. We sell phones, we offer access, we sell SIM cards and we sell recharges. We also offer 3G, even though currently it is only in Addis but in the second phase we will witness the expansion of the 3G services upon other cities.

There is also the whole commercial aspect. We have a commercial committee convening every week. I first thought that this would be too much to convey to them every week because we did not have any competition, but we thought it important in order to be able to make people understand the methodology that is called time2market, which is a method of studying a product from all its angles. We need to make sure that the network functions properly, that the IT structure functions correctly, that we can bill our customers and all of these very important details and I believe that this is now part of the philosophy of the company.

We are also developing new, more attractive products. We need diversity. Even if there is no competition we need diversity within our products range. I think that this success is not France Telecom's success but that of a French-Ethiopian team that manages this company. Of course we are the leaders but the actual success is to have got Ethiopians to adhere to us and to achieve great results.

Within the France Telecom group Ethiopia is considered as a major contract management success. Why? Well because it is a big country. We are currently talking about 16 million customers. We do not know many France Telecom subsidiaries with 16 million customers. With such a client base it is a very big operation for the group. This puts more emphasis on our success. It is easier to be successful when you have 200000 customers than when you have 16 million customers but I say that this success is a shared success. Shared success means that there is another area on which we are currently working.

Please tell us about your collaboration with Orange University.

Orange University is the France Telecom Orange group's university. The project is called the Capacity Building, and it deals with the transfer of competencies and the progressions of competencies. It is part of our contract but is also a huge challenge. We would like to say that we are raising the bar and we had competency assessments for every team and every person. We conducted them on all of the operational management staff and we are currently doing them on management support. We are currently building on a training course that will fit the needs to fill the knowledge gap, which is between what we expect to obtain from each team and what we are currently obtaining.

If we continue our collaboration with Ethiopia we have already presented our plans, we are ready and France Telecom Orange has already opened its doors. It is the first time that the Orange University opens its doors to a company that is not part of the group to be able to train at the “Orange Campus” level. The Orange Campus is the managerial training course of our university that trains all the managers of the group’s 35 different subsidiaries. We have already trained the top management team from Ethio Telecom. Today we are currently training supervisors with local trainers. The idea in this project is to train top management and the leadership team. We propose to train the leaders at the Orange Campus which is a training performed in France.

The management training methods that are used today are very different of what we used to know 10-15 years ago. I was not very sure that the Ethiopians would accept these methods but they were very well received. It is very much based on participation; it is not at all dogmatic like it used to be. It is based on participation and it works very well. Once managers are trained they pass that training onto the team leaders, with the support of France Telecom, but this time in Amharic because English training is only available for managers. The evaluations of these trainings are currently being done and they are at the same level as the evaluations of our top management in Paris.

How do you communicate regarding what you do, the achievements and the vision that you want to give Ethio Telecom locally and internationally?

Locally we essentially communicate through the new products and services that we provide. That is for the general public and the communication body. We had a press conference a month ago where we gave an overview of what we had achieved in the last six months. The new products and services, etc.

We also launched the new brand. We inaugurated our new concept boutique. That is regarding the general public and communication in broader terms. We also have a specific communication for enterprises. In Addis we have an Enterprise Day every trimester. We also have them in other regions. We invite 150-200 people and we explain to them what we are currently working on and we give an overview of our new products and services.

We talk about how we secure international transmissions. What we have achieved. Ethiopia has the very same standards as all its neighbouring countries regarding international capacities. The only problems we still have in Ethiopia are local problems, on a national level, such as blackouts and optimisation problems. We are currently working towards fixing those.

When we arrived here it was extremely difficult to call France. Calling internationally now is even faster than calling locally. So we communicate regarding our advancements and also we try to be transparent. We show what works and what does not. We explain that we are in a programme of change and that change takes some time. Especially since the telecoms industry is a very complex industry. Telecommunication and IT are two of the most complicated domains to manage even more so that there is a crossover in both fields.

If you had a last message to pass on to the international community what would that be?

My message, and the message of my team in general – even though it is never unanimous but for the most part – we are all very satisfied of coming here. Even if we are managing a very complex project, on a global humanitarian standpoint it is a beautiful achievement. It is a great personal challenge, a beautiful experience. Orange considers these types of experiences as a method of testing the people and testing the futures leaders of the group. To come back to Ethiopia, it is a very pleasant country to live in. It is a country where there are so many challenges that a person with an entrepreneurial mind would be able to realise a lot. For me this is very interesting and I see it with a lot of the people I work with and the expats living here. Things may not be simple every day but I think that the results and what we manage to achieve outweighs the daily difficulties.

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