Vodafone and MTN bid for telecommunications licenses in Ethiopia

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MTN and a consortium led by Vodafone have bid for telecommunications licenses in Ethiopia, as wireless service providers seek to tap into the world’s last remaining major market.

Ethiopia will take a few days to review the technical offer and then open the financial offers, said Brook Taye, an adviser at the finance ministry.

Earlier Monday, Kenya’s largest telecommunications provider, Safaricom, said it was bidding for a license jointly with Vodafone and the South African unit of UK operator Vodacom. Other members of the consortium include the CDC group and Sumitomo, he said in a notice.

Ethiopia, Africa’s most populous nation after Nigeria, is set to grow 8.7 percent next year, according to the International Monetary Fund, making it the fastest growing economy fastest on the continent.

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It is even as the nation battles multiple crises, including a civil conflict in the northern Tigray region, which threatens Prime Minister Abiy Ahmed’s economic transformation agenda.

“We’ve always wanted quality suppliers and that’s what we got,” Brook said over the phone. “These are two African giants – the consortium led by Safaricom and MTN – one or two of the operators will get a license in Ethiopia.”

International telecoms operators have long sought a foothold in Ethiopia, which has a population of over 110 million and only 50.7 million subscribers, is considered one of the last large untapped markets in the world.

The government plans to award two full-service telecommunications licenses as part of its plan to attract more foreign investment into its economy. Orange SA and Emirates Telecommunications Group are among the 12 players who had expressed an initial interest.

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Mobile money

“Based on the potential payback period and return on investment, relative to the potential cost of entering the market, few mobile operations may be willing to set aside capital or go into debt. to fund market entry, ”said Renaldo D’Souza, head of research at Sterling Capital Ltd.

Some companies have dropped out over fears that they will not be able to access Ethiopia’s market for potentially lucrative licensed mobile phone-based financial services and set up some of their own key infrastructure, according to Brook.

“The biggest obstacle is the ban on foreign ownership of mobile money companies – Safaricom and MTN are making this an integral part of their normal business model and would like to offer the service in Ethiopia alongside telecommunications services,” John said. Davies, analyst at Bloomberg Intelligence. .

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Mobile money services are excluded from licensing in offer, which would also force new suppliers to use existing tower networks. Entrants will compete with Ethio Telecom, the state-controlled monopoly in which the government separately plans to sell a 40% stake.

“It is slightly surprising that only two bidders made it to this stage, given the level of interest and the nature of other interested parties,” Davies said. “Some of them may indeed have been put off by the situation in Tigray or seek to invest in partial privatization.


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