Safaricom has been shortlisted as one of the firms eligible to bid for one of two telecommunication licenses to be offered by Ethiopia. The Ethiopia Communications Authority shortlisted six companies from the 12 that had expressed interest in entering the Ethiopian market.
The shortlisted firms will be expected to submit their technical bids by April 5, 2021.
“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.”
Safaricom Ltd, together with its parent companies, Vodafone Group Plc and Vodacom Group Limited formed a joint venture in their bid to enter the Ethiopian Market. The three partners signed an agreement to borrow up to Sh500 million (55.7 billion) from the US International Development Finance Corporation (DFC) for the project which is expected to top the Sh111 billion mark.
Earlier, Safaricom said it was willing to take on more debt as the majority shareholder in the consortium with a stake of 51 percent. Vodacom has a 5 percent stake while the rest is shared out among various financial investors.
“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.
Ethiopia invited foreign telecom companies as part of its homegrown economic reform agenda launched in 2019. The companies have been invited to buy a 40 percent stake in Ethio Telecom, in efforts to end monopoly in the sector and liberalize the country’s economy.
Safaricom said they were ready to abide by the conditions set by the Ethiopian government. Ethiopia has a population of about 110 million people with 50 million mobile phone subscribers, making it a vast potential market for mobile services.
“Mobile phone use and ownership are significantly behind that of Egypt, Kenya, and even Sudan, which is amplified when examining the uptake of mobile broadband services,” the World Bank said earlier. The institution is among Ethiopia’s advisors for the venture.
Ethiopia’s telecom sector transformation comprises of Ethio Telecom, the sole supplier of telecom services in the country, and the Ethiopian Communication Authority (ECA) which is in charge of licensing for the two companies that will be successful in entering in the country.
The other 11 firms that had expressed interest are Etisalat, Axian, MTN, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, and the two non-telecom operators, Kandu Global Telecommunications and Electromecha International Projects. The Ethiopian Communications Authority has not disclosed which firms will be dropped from the bid.
Apart from the licenses, the Ethiopian government is looking to dispose of a minority stake in Ethio Telcom, which has a monopoly in the market.
The winning telco will be awarded a full license, but Ethiopia’s government said that services like mobile phone-based financial services will be excluded from the deal.