MTN, Vodafone bid for telecom operating licenses in Ethiopia

telecoms operating licenses

Ethiopia’s Finance Ministry announced on Monday that two bids have been made for two new telecoms operating licenses, as the country looks to liberalize its telecoms industry and economy.

The two license bidders include South Africa’s MTN Group and a consortium of Kenya’s Safaricom, Vodafone, Vodacom, CDC Group (a UK development finance institution) and Japanese global trading and business investment company Sumitomo Corporation.

The country’s Finance Ministry highlighted in a Tweet that the two bidders have already advanced to the next stage of negotiations and vetting in the form of a technical and financial evaluation.

However, a senior advisor at the ministry told Reuters, that the license winners will be announced as swiftly as next week.

“We will select the winners after technical and financial evaluation is completed,” Balcha Reba, director general of the Ethiopian Communications Authority (ECA), said at a news conference on Monday. The government may award one or two licenses and has the right to cancel the bidding process, he added.

These licenses are considered as the first step toward Ethiopia opening up its economy, which will also involve the sale of a 45 percent stake in the state-owned operator Ethio Telecom.

The country of 110 million people has one of the world’s last closed telecoms markets.

Kenya’s Safaricom said in a statement that “for structuring purposes, the respective consortium members may invest through special purpose investment vehicles.”

The company estimated in 2019 that it would have to pay about $1 billion for a new license. Vodacom Group CEO Shameel Joosub said the consortium had submitted a “strong tender.”

But while bid winners will be able to secure full telecoms operating licenses, they will not be allowed to operate mobile phone based FinTech services, the government noted last year. They will also be required to set up their own network infrastructure, such as cellphone towers, the government added.

These bids are considered a breath of fresh air to the country, as the ECA has previously extended the deadline for operators to bid from April 5 to 26 April, following requests made by participants of the tender citing pandemic related issues.

Earlier then, it was rumored that France’s Orange, China’s Sharing Mobile, and the UAE’s Etisalat would be among the bidders, but it seems as though these companies have their sights set on the 45 percent stake in Ethio Telecom up for grabs.

Ethiopia is one of the last countries in the world to have retained a state-owned monopoly provider of telecom network and services, a market which is dominated by the private sector in most countries.

Opening the market to private sector competition, and foreign investment, is expected to bring lower prices, higher quality of service and more choice for consumers. It will also lay the foundations for Ethiopia’s telecom liberalization and future digital transformation.