The Ethiopian government has revitalized its strategy to grant another telecoms license to a major global operator. Fielding an invitation by the Ethiopian Communications Authority (ECA), interested parties have again the chance to lay their claim on this the lucrative telecommunications market.
Eager to incite interest from world-class telecoms operators, the ECA is showcasing this opportunity to tap into Ethiopia’s burgeoning economy. Operators can obtain a copy of the Request for Qualifications (RFQ) document, with responses due by 15th September. There is an air of uncertainty, however, as the previous attempts to sell a license didn’t meet the ECA’s expectations.
Namely, only two companies submitted binding offers for the two accessible private licenses back in April 2021. The A consortium, led by Safaricom and including Sumitomo Corp of Japan, UK-based British International Investment (BII), and Vodafone, through its stakes in Vodacom and Safaricom, secured the first license with a mighty US$850 million bid.
Contrarily, a second consortium, backed by South Africa’s MTN and China’s Silk Road Fund, proposed a $600 million offer that fell short of government expectation. Speculations run wild, attributing the refusal to possibly the presence of Chinese investors though the actual reason might be more monetary than political.
While the primary license-seeking endeavor happening over two years ago left its mark, the international telecoms community was undoubtedly monitoring, affecting the outcome of this next licensing endeavor.
The Ethiopian telecoms market continues to attract interest, despite some operability obstacles. Notably, incumbent Ethio Telecom reported having 70 million customers at the end of 2022, including over 27 million Telebirr mobile financial service users. Encountering stiff competition, new entrants might find their encounter with the Ethiopian market a challenging venture.
Nonetheless, the state strives to paint an optimistic picture of the situation. The ECA highlighted thriving developments in the Ethiopian telecommunications sector since the start of the liberalization process. These include a strong telecommunications regulatory framework, a structure for Mobile Financial Services, and more available spectrum.
Previously, newcomers were out of bounds from the financial services sector, hampering the appeal for prospective bidders. Statedly, however, conditions have transformed for the better.
A parallel storyline running alongside this competition is the part-privatization of Ethio Telecom. The government requested expressions of interest in a 40% stake in the incumbent last Autumn, but without any clear outcome as of yet. Noteworthy is the attention on these proceedings on social media by the Ministry of Finance, pointing to dialogues with global telcos who are seemingly enthusiastic about investing in Ethiopia, such as Veon and e&.
However, it must be stressed that these showings of interests do not guarantee a concrete outcome. The government’s vision is for a fruitful climax to these dual sales, dramatically reshaping the Ethiopian telecoms landscape.
