The battle for the lucrative Ethiopian telecommunications market has narrowed down to consortia led by two of Africa’s telecom giants, Vodacom and MTN Group, setting another stage for their sustained competition for the continental market.
The bids of the two consortia led by Safaricom on the one hand, and MTN Group on the other, were opened by the Ethiopian Communication Authority (ECA) evaluation committee last week.
Vodacom, South Africa’s largest mobile phone operator, which owns 35 per cent shareholding in Safaricom, is in the consortium brought together by the Kenyan firm, also comprising the UK parent Vodafone, UK sovereign wealth fund CDC Group and Japanese conglomerate Sumitomo Corporation.
Nine other firms – Etisalat, Axian, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, Kandu Global Communications and Electromecha International Projects – which had expressed interest in the deal, pulled out of the bidding process.
Safaricom, Vodafone and Vodacom offer voice, messaging, data, entertainment and financial services to at least 452 million customers in Africa, Europe and India. Sumitomo Corporation’s operations include mobile telephony and development of the latest 5G technology, which is being built around the world. Safaricom launched its 5G network late March.
CDC Group, which has a £4.7 billion ($6.5 billion) war chest, is expected to help in funding the capital-intensive venture.
$500m loan
The consortium has also lined up a $500 million loan from America’s sovereign wealth fund US International Development Finance Corporation.
The Ethiopian telecoms market has remained largely unexplored in terms of mobile telephone services penetration after many years of government control, until Prime Minister Abiy Ahmed’s administration came into power and started instituting reform measures meant to liberalise the economy and boost forex reserves.
Ethiopia, Africa’s second-most populated nation after Nigeria, is forecast to expand 8.7 per cent next year, according to the International Monetary Fund, making it the fastest growing economy on the continent even as the Abiy administration battles multiple crises, including a civil conflict in the Tigray region, debt and a forex reserve crunch.
"We always wanted quality providers and this is what we have received," Brook Taye, an adviser in the Ethiopian Finance Ministry, told Bloomberg. "These are two African giants — the Safaricom-led consortium and MTN — either one or two of the operators will get a licence in Ethiopia."Addis said it will review the technical offer and then open the financial bids, then announce the winner in the coming days.The telecom licences are expected […]