Major milestone as Safaricom gets a license to operate in Ethiopia
Ethiopia, one of the last countries in the world to have retained a state-owned monopoly provider of telecom network and services, a market which is dominated by the private sector in most countries is finally welcoming a new private operator soon after its telecoms authority awarded the one operating license to a consortium led by Kenya’s Safaricom, and Vodafone. The consortium, which also includes British development finance agency CDC Group and Japanese Sumitomo Corp, paid $850 million for the license.
“The Council of Ministers has unanimously made a historic decision today allowing Ethiopian Communications Authority to grant a new nationwide telecom license to the Global Partnership for Ethiopia which offered the highest licensing fee and a very solid investment case,” tweeted Abiy Ahmed Ali, the Prime Minister of the Federal Democratic Republic of Ethiopia.
The PM noted that the over USD 8 billion total investment will be the single largest foreign direct investment into Ethiopia to date and would place Ethiopia fully on the digital track. Abiy thanked all that have taken part in the process for pulling off a ‘very transparent and effective process.’
The government also called off the sale of a second new permit but will invite fresh bids from international wireless carriers after some policy adjustments. Ethiopia had received two offers for the license bid. The consortium led by Safaricom and another from MTN Group Ltd., Vodacom’s Johannesburg rival backed by Chinese’ Silk Road Fund investment group which paid $600 million.
Safaricom will now enter a commitment of creating 1.1 million jobs in 10 years and cover it with a 4G service by 2023 in this Africa’s second-largest country that has a population of more than 110 million yet less than half its people have mobile-phone subscriptions.
Safaricom in 2019 had estimated that it would have to pay about $1 billion for a new license. But while the Ethiopian government is also preparing to sell a 45% stake in state-run mobile operator, Ethio Telecom, its mobile phone-based financial service will still continue to dominate the sector as foreign operators are currently barred by law from participating, meaning MPESA will not be rolled out in the country as part of Safaricom’s offerings. Prime Minister Abiy Ahmed, however, announced that the mobile financial services market would be opened up to competition after a year from now.