Ethiopia’s Telecom Auction Plan Falters Before Bidder Meeting

Ethiopia’s Telecom Auction Plan Falters Before Bidder Meeting

(Bloomberg) — Ethiopia’s protracted privatization process faces sticking issues as the government and prospective investors prepare to meet this week, with an escalating armed conflict starting to add to concerns.

MTN Group Ltd., Africa’s largest carrier by subscribers, sees the investment case weakening due to uncertainty over whether international tower companies would participate and a mobile-money license be included, Chief Executive Officer Ralph Mupita said this week, adding that the group remains interested.

Crosstown Johannesburg rival Vodacom Group Ltd. said it’s monitoring the conflict between the government and the Tigray region before making its final decision, having earlier said it would bid in a consortium with Vodafone Group Plc and Kenya’s Safaricom Plc.

The remarks indicate a more cautious approach from companies that have long expressed an interest in expanding in Ethiopia, even before Prime Minister Abiy Ahmed proposed ending state-owned Ethio Telecom’s monopoly in mid-2018. Africa’s second-most populous country with more than 100 million people is seen as one of the final frontiers for international operators, and French group Orange SA is another to have thrown its hat into the ring.

‘Onerous Requirements’

“The potential remains, the question is really to what extent operators will be willing to acquiesce to the more onerous requirements of the state,” said Chiti Mbizule, a telecom analyst at Fitch Solutions. “Political instability in the country also continues to pose a major risk not only to the pace of the reforms but also the attractiveness of the market.”

Ethiopia’s government says the plan is on track. A public consultation with interested bidders is going ahead this week, according to Eyob Tekalign, the minister responsible for privatization. The state wants to answer all questions investors might have before issuing a document outlining what it expects from companies in terms of cash and technical capacity, he said. The question of mobile money has been raised by the operators as it’s now a key part of most African telecom business models.

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