The Effect of Fintech on Firm Performance: The Case of Telebirr and Ethio Telecom
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Date
2025-02
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Addis Ababa University
Abstract
The rapid evolution of financial technology (FinTech) has reshaped corporate strategies globally, particularly in the telecommunications sector, where mobile money services are pivotal for revenue diversification and financial inclusion. This study examines the effect of Telebirr, Ethio Telecom’s FinTech platform, on firm performance in Ethiopia’s state-controlled telecom sector. Focusing on Telebirr’s digital payment, lending, and mobile money transfer services, the research evaluates their impact on revenue growth, operational efficiency, customer acquisition, and market competitiveness. Adopting a quantitative approach, the study employed a structured questionnaire to collect data from 255 Ethio Telecom employees involved in FinTech operations. Descriptive and inferential statistical analyses, including Pearson’s correlation and multiple linear regression, were conducted to test hypotheses derived from the Resource-Based View and Diffusion of Innovation theories. Key findings revealed that Telebirr’s digital payment services significantly enhanced operational efficiency and customer satisfaction, with moderate contributions to revenue growth. However, digital lending services, while attracting new customers, exhibited negligible effects on profitability. Mobile money transfers increased transaction volumes but did not substantially improve market competitiveness. Regression analysis indicated that only 3.7% of firm performance variance was explained by FinTech services, suggesting the influence of external factors such as regulatory constraints, low financial literacy, and infrastructural gaps. The study concludes that while Telebirr strengthens Ethio Telecom’s operational capabilities, its financial impact remains constrained by Ethiopia’s unique market dynamics. Strategic recommendations include enhancing digital infrastructure, refining lending models, and reducing transaction costs to maximize FinTech’s potential. Policymakers are urged to foster regulatory flexibility and financial literacy programs to support Ethiopia’s digital transformation. This research contributes insights into FinTech’s role in regulated markets, offering a framework for telecom operators navigating digital ecosystems in similar contexts.
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Keywords
FinTech, Telebirr, Ethio Telecom, mobile money, digital payments, digital lending, firm performance, revenue growth, operational efficiency, market competitiveness