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QUESTION TWO [30] Read the article below and answer the questions that follow: Ethiopia to split telecoms monopoly in two to spur competition Ethiopia plans to sell a 30 to 40 percent stake in its state-run telecoms monopoly to big telecoms companies and will split the company in two to spur competition, Prime Minister Abiy Ahmed said on Monday. Selling stakes in its lucrative telecoms monopoly and other assets could open Ethiopia, one of the world’s largest untapped markets, to huge potential investments by firms willing to work with a government still wary of private enterprise. “There will be two telecom corporations and shares will be sold in both,” Abiy said during a question and answer session in parliament. “Somalia, with a population of 12 million, has four telecommunications firms. Ethiopia, with 100 million people, has one. There needs to be competition in the country.” Ethiopia seeks top investors The stakes in Ethio Telecom will be allocated to firms that are ranked top 10 in the industry globally, Abiy said. South African telecoms groups MTN and Vodacom have both recently expressed interest in Ethiopia and so maybe potential investors. “There will be one year or two years of intensive study taking place (before the shares of Ethio Telecom are sold),” Abiy said. The stake sales are part of a raft of measures announced by Abiy, 41, a former army officer who became prime minister in April, saying a new start was necessary to end political instability in a country of 100 million people, where 40 percent are aged under 15. Foreign companies have been waiting for Ethiopia to open its state monopolies. 2.1 Critically assess the implications of splitting Ethiopia’s state-owned telecom monopoly into two separate firms on the market structure of the telecom industry. (15). 2.2 Discuss the types of price discrimination that telecom firms in Ethiopia may engage in following the entry of private firms and increased competition. (15)

          QUESTION TWO [30] Read the article below and answer the questions that follow: Ethiopia to split telecoms monopoly in two to spur competition Ethiopia plans to sell a 30 to 40 percent stake in its state-run telecoms monopoly to big telecoms companies and will split the company in two to spur competition, Prime Minister Abiy Ahmed said on Monday. Selling stakes in its lucrative telecoms monopoly and other assets could open Ethiopia, one of the world’s largest untapped markets, to huge potential investments by firms willing to work with a government still wary of private enterprise. “There will be two telecom corporations and shares will be sold in both,” Abiy said during a question and answer session in parliament. “Somalia, with a population of 12 million, has four telecommunications firms. Ethiopia, with 100 million people, has one. There needs to be competition in the country.” Ethiopia seeks top investors The stakes in Ethio Telecom will be allocated to firms that are ranked top 10 in the industry globally, Abiy said. South African telecoms groups MTN and Vodacom have both recently expressed interest in Ethiopia and so maybe potential investors. “There will be one year or two years of intensive study taking place (before the shares of Ethio Telecom are sold),” Abiy said. The stake sales are part of a raft of measures announced by Abiy, 41, a former army officer who became prime minister in April, saying a new start was necessary to end political instability in a country of 100 million people, where 40 percent are aged under 15. Foreign companies have been waiting for Ethiopia to open its state monopolies. 2.1 Critically assess the implications of splitting Ethiopia’s state-owned telecom monopoly into two separate firms on the market structure of the telecom industry. (15). 2.2 Discuss the types of price discrimination that telecom firms in Ethiopia may engage in following the entry of private firms and increased competition. (15)

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