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Consortium led by Safaricom wins Ethiopian operating licence

MTN also submitted a bid, but its offer was deemed too low.
Vodacom is part of the winning consortium. Image: Moneyweb

Ethiopia’s telecommunications regulator has awarded one operating licence to a consortium led by Kenya’s Safaricom Vodafone, and Japan’s Sumitomo Brook Taye, a senior advisor at the finance ministry, said on Saturday.

The consortium, which includes Vodacom and British development finance agency CDC Group, paid $850 million for the licence, Brook said. South Africa’s MTN had also bid for a licence.

Africa’s second-most populous country is hoping that the opening of one of the world’s last major closed telecoms markets will create millions of online job opportunities.

The awarding of the new licence marks the “beginning of a new era in our country,” the Ethiopian Communications Authority said on Twitter.

Investment

The consortium plans to invest up to $8.5 billion in infrastructure, among other areas, Brook said, adding that it was expected to create up to one and a half million jobs.

“With over $8 billion total investment, this will be the single largest FDI [foreign direct investment] into Ethiopia to date,” Prime Minister Abiy Ahmed said on Twitter.

The operator will begin with 4G services, Brook said.

“We will soon open a bid for the remaining licence,” said Balcha Reba, director-general of the Ethiopian Communications Authority.

Balcha said MTN’s offer of $600 million was deemed too low.

Safaricom in 2019 had estimated that it would have to pay about $1 billion for a new licence.

Representatives from Vodacom and CDC Group declined to comment. Vodafone and Sumitomo Group could not immediately be reached for comment. Safaricom said that the company would issue a statement on Monday.

The Ethiopian government is also preparing to sell a 45% stake in state-run mobile operator, Ethio Telecom. Earlier this month, the operator launched a mobile phone-based financial service.

For the moment, only Ethio Telecom will be able to offer mobile financial services as foreign operators are currently barred by law from participating. However, Ahmed said that mobile financial services would be opened up to competition after a year.

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