Read time: 3 minutes

Safaricom to bid for Ethiopia telco license in April 2020

Ethiopia , 20 Feb 2020

Safaricom to bid for Ethiopia telco license in April 2020

Kenya's dominant telecom operator Safaricom plans to officially make an offer to the Ethiopian government for one of two available telecommunications operating licenses in April 2020.

In November 2019, ITWeb Africa reported that Safaricom and Vodacom planned to submit a joint bid to enter Ethiopia.

At the presentation of Safaricom's financial performance for the six months ended 30 September 2019, interim chief executive officer Michael Joseph said Ethiopia has a market entry fee capped at US$1-billion and the company will require an additional US$1-billion investment in project infrastructure.

More recently Joseph reiterated that the company remains in search of partnerships and has not yet finalised its list of prospective allies.

"We do know the investment to build the network in Ethiopia will be big, so all of us will have to borrow to invest. The composition of the consortium will be on your capability of taking on debt and your willingness to take a risk," he said.

Joseph added that members of the consortium will have to be finalised before Safaricom can reach a decision on the source of funding for its bid, and it could take up to ten years before the investment in the East African country will become profitable.

"Ethiopia is the biggest prize left in Africa from a telecoms point of view (and) there's not many corporations that can do this on their own," said Joseph.

Ethiopia is an attractive market given its population of 108 million people (second largest country in Africa) and according to available data, only 41% of the population are mobile subscribers. Data penetration and internet access are also low.

The bidding process for the two operating licenses is effectively the first time that Ethiopia's telecoms market will be opened up to foreign investment.

In addition to Safaricom, several other operators have expressed interest in the market including Orange SA and MTN Group Ltd.

Key market influences include the privatisation of Ethiopian Telecommunications Corp. and the issuance of spectrum licenses.

The Ethiopian government has also not published any guidelines governing the bidding process but if released, there is speculation these could include limitations on ownership by foreign investors.

Read more
Login
Daily newsletter