Safaricom CEO Peter Ndegwa. FILE PHOTO | NMG Safaricom #ticker:SCOM has made it to the shortlist of six firms that have been cleared to bid for one of two Ethiopian telecoms licences that will be offered this year.
The Ethiopian Communications Authority has whittled the list down from a consortia of 12 that had expressed interest in entering the country’s telecommunications market.
Firms will be required to submit their technical and financial bids by April 5, compared with a previous deadline of March 5.
Safaricom, which last year expressed an interest in a consortium with Vodafone and Vodacom, has signed an agreement to borrow up to $500 million (Sh55.7 billion) from America’s sovereign wealth fund US International Development Finance Corporation (DFC) to fund the Ethiopia expansion
“There are about five to six consortia who are qualified to bid. Bids are due to be submitted in April,” said Michael Joseph, Safaricom chairman, in an interview. “We are working towards the final submission around March/April.”
The Horn of Africa nation’s telecoms industry is considered the big prize due to the huge size of the market, which serves more than 100 million people.
Ethiopia is pressing ahead with the auction of the new licences and the sale of a 45 percent stake in state monopoly Ethio Telecoms, in spite of a military conflict in the northern Tigray region.
Winners will be given full operating licences, but they will not be allowed to offer mobile phone-based financial services like M-Pesa, government officials said last year.
They will also be required to set up their own network infrastructure, such as cellphone towers.
The financial investment in Ethiopia is expected to top the $1 billion (Sh111 billion) mark, with the DFC loan deal seen as part of the project’s fundraising efforts.
Safaricom had earlier said it was ready to take more debt in its role as the majority shareholder of the consortium with a 51 percent stake.Vodacom has a five percent interest in the joint venture, with the rest of the ownership spread among unnamed strategic financial investors.The Safaricom consortium, if successful, will likely rely on funding from deep-pocketed foreign investors such as DFC given the size and international nature of the Ethiopia investment.The Nairobi Securities Exchange-listed firm’s borrowings have so far been limited to local banks from which it has mostly taken short-term debt denominated in Kenya shillings.The company recently raised its bank borrowings to a new high of Sh32.7 billion to fund capital […]
