Ethiopia raises $ 850 million in landmark telecommunications auction
Ethiopia has granted the first US $ 850 million telecommunications license to a consortium including Vodafone in the UK, which could herald the opening of Ethiopia’s closed economy.
The consortium led by Safaricom in Kenya and Vodafone and Vodacom also includes UK financial development agency CDC and Sumitomo from Japan. South Africa’s MTN’s offer to bid for the second license at a price of US $ 600 million was rejected because the bid was too low and the license would be re-offered.
The Ethiopian government has said that in the rapidly developing country of 114 million people, the opening of the world’s largest monopoly telecommunications company is the start of the Ethiopian government. “The case of the century”.
However, restrictions on the provision of lucrative mobile money services and the government’s insistence on requiring new operators to build their own infrastructure or lease infrastructure from state-monopolized Ethio Telecom instead of ‘use third-party tour operators, potential bidders delayed.
Some bidders are also considered suspicious in this regard. Unstable political situation In November of last year, after the EFF moved the government from the Tigray region.
According to telecoms analysts, companies that initially showed strong interest, including Orange in France and Emirates in the United Arab Emirates, should reconsider their decision when renewing their licenses.
Since the initial tender closed, the government has relaxed its opposition to mobile money, saying new operators will be able to provide such services within a year, but require approval. of the central bank.
Prime Minister Abiy Ahmed said in a tweet on Saturday that the consortium led by Safaricom is the largest foreign direct investment in the country’s history. For much of the past 20 years, Ethiopia’s country-inspired and Asian-inspired development model has prevented foreign capital from controlling the “dominant heights” of the economy such as banking and telecommunications, and its growth rate has reached almost double digits.
Abi said the new consortium will invest more than US $ 8 billion over the next ten years to build a network.
Brook Taye, a senior finance ministry adviser and a member of the privatization team, said the successful consortium also pledged to launch a low-earth orbit satellite covering the entire country by 2023. The new investment will generate between $ 1.1 million and $ 150 million, he said, I have a job.
A person familiar with the bidding process said the hope of releasing good news ahead of next month’s national elections has made investment and employment figures look utopian. The insider said, “If you invest $ 8 billion, you will never be able to make any money.” “I think they just came up with numbers out of thin air.”
Safaricom has approximately 5,500 employees in Kenya. The country’s economy is similar to Ethiopia’s, with a population of around US $ 95 billion and a population of 52 million, less than half the size.
However, Safaricom’s sustainability report said its service is providing jobs for 1 million people through its “wider economic impact,” a figure that takes into account entrepreneurs who can make a living from the ecosystem. telecommunications.
Brooke said the second driver’s license will be updated “soon” and its rules could be further adjusted to make it more attractive. Potential first-round bidders complained about changes to the rules, including a lack of clarity on interconnection fees, which were reduced shortly before the tender.
Brook denied that the offer was opaque. He said: “This is the most transparent process in Ethiopia’s history.” He said the industry would open up further, “so we think there will be a very successful second offering.”
Ethiopia also plans to sell a 40% stake in Ethio Telecom, which has 46 million subscribers, later this year.