Ethiopia to reopen bidding for second telecoms license in August 2021

ETHIOPIAThe government of Ethiopia will open bidding for its second telecommunications operator licence in August 2021, which will extend to the right to operate mobile money services in the country earlier not available in the first licence.

The Horn-of-Africa nation sold only one of two full-service licences on offer in May 2021, citing a lower-than-expected price for the second one, which it now wants to offer again.

“We have made some changes that can uplift its value, for instance, mobile financial services,” Balcha Reba, director-general of the Ethiopian Communication Authority, said in an interview.

The government of Ethiopia expects prospective bidders to include firms that had expressed interest in the previous attempt to sell the licence but whose bids were deemed to be insufficient, said Brook Taye, a senior adviser at the ministry of finance.

“We expect to have a strong interest,” he said.

A consortium led by Kenya’s top mobile phone operator, Safaricom, and including South Africa’s Vodacom Group, secured the first licence.

Vodacom rival MTN Group had also bid in the first round but it was not awarded a licence. 

Officials from the Authority are optimistic of the uptake of the second licence as a result of amendments like the addition of the right to operate mobile money service, a right only available national carrier Ethio Telecom.

“We have made some changes that can uplift its value, for instance, mobile financial services

Balcha Reba – Directpr General, Ethiopia Communicatios Authority

Mobile money services are likely to attract worldwide operators, presenting an opportunity for regional mobile money leaders like M-Pesa and MTN Momo to split the underserved 112 million Ethiopian population with Ethio Telecom, which boasts over 4 million users on its mobile money platform.

World Bank’s private-sector lending arm International Finance Corporation (IFC) will serve as the transaction adviser in the transaction expected to follow the pricing of the first licence valued at US$850 million, clinched by a consortium led by Safaricom.

In July 2021, Safaricom shareholders approved the incorporation of Safaricom Telecommunications Ethiopia PLC, the subsidiary behind the consortium’s Ethiopia operations scheduled to kick off in 2022.

This comes as Ethiopia launched a tendering process in June 2021 for the proposed sell-off of a 40% stake in state-owned carrier Ethio Telecom to private investors, part of the government’s broader plan to open up the Horn of Africa country’s economy.

Orange SA has expressed its interest in buying a minority stake in Ethiopia’s state-owned telecom monopoly as part of the country’s privatization of the industry

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