ETHIOPIA – The Ethiopian Communications Authority has shortlisted a consortia of 12 companies that had expressed interest in entering the country’s telecommunications market, one of them being Kenya’s telecom giant Safaricom.
The firms will be required to submit their technical and financial bids by April 5, compared with a previous deadline of March 5.
The Ethiopian Communications Authority announced that it had received expressions of interest from scores of firms, including telcos and non-telecom operators by June 22 which included the Safaricom consortium, Etisalat, Axian, MTN, Orange, Saudi Telecom Company, and Telkom SA.
Others were Liquid Telecom, Snail Mobile, Kandu Global Communications and Electromecha International Projects.
Safaricom, which last year expressed an interest in a consortium with Vodafone and Vodacom, has signed an agreement to borrow up to US$500 million from America’s sovereign wealth fund US International Development Finance Corporation (DFC) to fund the Ethiopia expansion
“There are about five to six consortia who are qualified to bid. Bids are due to be submitted in April,” said Michael Joseph, Safaricom chairman, in an interview. “We are working towards the final submission around March/April.”
Ethiopia is pressing ahead with the auction of the new licences and the sale of a 45 percent stake in state monopoly Ethio Telecoms, in spite of a military conflict in the northern Tigray region.
Winners will be given full operating licences, but they will not be allowed to offer mobile phone-based financial services like M-Pesa, government officials said last year, and they will also be required to set up their own network infrastructure, such as cell phone towers.
Safaricom had earlier said it was ready to take more debt in its role as the majority shareholder of the consortium with a 51 percent stake.
The company recently raised its bank borrowings to a new high of US$298.6 million to fund capital expenditure and pay dividends, with most of the debt expected to be settled by March next year.
The Ethiopian Communications Authority is yet to disclose which of the firms have been dropped from bidding.
Vodacom recently told its investors that the capital expenditure for the potential Ethiopian entry was not yet clear.
The South African telco added that while it was limiting its exposure in the consortium to five percent, it could raise its ownership after a couple of years into the operation.
“I think it will be a very good exposure to Safaricom from the perspective of geographical closeness on the one perspective, but also giving Safaricom additional exposure to more growth areas,” Vodacom’s chief executive, Shameel Joosub, said in a recent earnings call.
Players like Safaricom are attracted by the growth potential in the Ethiopian market, whose 100 million population offers a penetration rate of 44 percent.
Kenya’s 52.2 million mobile phone subscribers give it a penetration of 109.2 percent.
Addis Ababa has kept foreign involvement in the economy at a bare minimum.
The institution is advising Ethiopia on the telecoms transactions.
Besides selling the new telecoms licences, the Ethiopian government is also disposing of a minority stake in Ethio Telecom, which has a monopoly in that market.