Driven by investment in infrastructure, Ethiopia's IT market is expected to grow in 2010, potentially providing opportunities for vendors and IT service providers.IDC expects the IT spending growth witnessed in 2009 to accelerate in 2010 in tandem with overall economic growth, supported by recovery in global demand and relatively stable oil prices."We expect IT spend to gain momentum especially in the government, corporate and education sectors, which are heavily investing in building infrastructure; this presents huge opportunities for vendors and other IT service providers looking into having a strong footing in the second-largest IT spender in East Africa after Kenya," said Stanley Kamanguya, system and infrastructure analyst at IDC East Africa.

Although the Ethiopia Telecommunications Company (ETC) enjoys a monopoly, the entry of fibre-optic cables connecting the eastern coast, along with the growth of terrestrial cables, is expected to open up the market as countries seek regional interconnectivity. Ethiopia is landlocked and depends on the ports of Djibouti, Port Sudan and Somaliland to clear its goods.

"We have seen examples of growth in telecommunications (including for business purposes) when cross-border fiber-optic connectivity has been established; however, the main impact will be Ethiopia's ability to connect to the rest of the world via much faster and higher-quality access: a fiber-optic submarine cable," said Dobek Pater, senior telecom analyst at Africa Analysis.

SEACOM has already expressed interest in extending its fiber-optic reach into Ethiopia, but much of the spending in the country may be restricted to ETC.

"As long as the government remains the sole owner of telecoms operators in the country, we are unlikely to see high levels of investment, particularly given the fact that the Ethiopian government is not one of the wealthier in Africa (very limited tax base, no significant natural resources to exploit)," added Pater.

However, the Ethiopian government has taken to restructuring the management of ETC; MTN, the largest mobile company in Africa, has partnered with ETC for GSM (Global System for Mobile Communications) services. Meanwhile, the launch of CDMA (Code Division Multiple Access) is expected to expand the services offered by ETC.

The hope for competition and liberalization has not been lost, because the expansion of services within ETC has been viewed as a form of internal competition.

"This is the same evolutionary path that was followed by Libya, which then spanned off and privatized one of the state-owned mobile operators in order to create real competition," said Pater.

IDC also sees the government's privatization initiative and increased budgetary allocations to ICT infrastructure building projects as major drivers for growth.