MTN, Vodacom consortium only bidders for Ethiopian license
The Ethiopian Communications Authority has received just two offers for new telecoms licenses in the country, after the market initially expected a lot more interest.
The Ethiopian Communications Authority (ECA) has received just two offers for new telecoms licenses in the country, after the market initially expected a lot more interest.
The ECA confirmed that on April 26, 2021, it had received both technical and financial offers from pan-African operator MTN, and a consortium made up of Vodafone, Vodacom and Safaricom.
"It is very surprising that out of the 12 companies that previously expressed interest in the bid, only two managed to submit their proposals," Danson Njue, Omdia senior research analyst for Africa, told Connecting Africa.
In June 2018, the Ethiopian government announced it would open up the telecoms sector in the country and award two new 15-year licenses and sell a 45% stake in state-owned Ethio Telecom.
Since then, the process has had some delays but on Monday the ECA said it had officially closed the application process for the two new licenses after receiving the two bids that met its "strict technical qualification criteria."
MTN Group confirmed in a statement that it had made a bid in partnership with Silk Road Fund from China. It said other partners will be disclosed on a successful bid outcome.
The Vodacom consortium, named The Global Partnership for Ethiopia, also includes Japan's Sumitomo Corporation and CDC, the UK's development finance institution.
"I think most of the telcos that backed off from the bid process are hoping to acquire the 45% stake that the government plans to divest in Ethio Telecom," Njue said.
Major interest
The ECA said last June that it had received 11 complete submissions of interest in the two new telecoms licenses up for grabs, and one incomplete submission.
At the time, nine operators threw their hats in the ring, including Etisalat, Axian, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom and Snail Mobile.
With a population of over 110 million, the Horn of Africa nation's telecoms industry is regarded as a massive growth opportunity because up until now it has been one of the last nations with a complete telecoms monopoly.
The growth opportunity is also huge, with less than 40% of Ethiopia's population using a mobile phone and only about 20% accessing the Internet, according to a recent report from DataReportal.
However, political and economic uncertainty and ongoing conflict in the northern Tigray region could be scaring investors away.
Njue said that delays in the process may have affected investment plans for some multinational companies, as well as new regulations last year that would stop foreign telecoms tower operators from building new infrastructure in the country.
"This would require the new licensees to deploy their own network infrastructure, which would mean that the successful operators would need to invest quite a tidy amount of money to meet the network coverage obligations outlined by the regulator," he said.
Njue said that the license fee is also expected to be high, based on Safaricom's projections in 2019 that it would cost about $1 billion for a new license.
"In addition, the government announced that the new licensees would not be allowed to provide some services such as the mobile financial services. The Ethiopia market provides a niche market for financial services due to relatively low financial inclusion and denying new operators an opportunity to provide the services may discourage some companies," he added.
The ECA previously said it expects that the new operators will be awarded their licenses in the second quarter of 2021.
— Paula Gilbert, Editor, Connecting Africa