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US$800m in funding behind Ethiopia telco licence, Liquid datacentre drive

By , Sub Saharan Africa Business, Tech, News and Development Journalist
Ethiopia , 14 Dec 2020

A United States development funder, the Development Finance Corporation (DFC) has availed US$500-million to back a consortium of regional and international telecommunication firms with their bid to acquire a mobile licence in Ethiopia, while also advancing US$300-million to support Liquid Telecom’s datacentre expansion across the continent.

Ethiopia is considered to be a lucrative growth frontier for telecommunications investment and the government of Prime Minister Abiy Ahmed has already opened investment bids for two private mobile telecom operators.

There are also plans to partially privatise the state-controlled Ethio Telecom, which has largely been criticised for cutting connectivity in the crisis ravaged Tigray region, currently at the centre of civil conflict.

There has been concern that the worsening humanitarian crisis would unnerve potential investors in the telecommunications market.

However, the government of Ethiopia is pressing ahead with the processing of bids for the two mobile permits and the Finance Ministry has confirmed that bids will close at the end of March next year.

International telecommunications group Vodafone, along with Vodacom and Safaricom are bidding for the mobile license as a consortium and have previously said that they would need up to US$1-billion to build and operationalise a mobile network in Ethiopia.

Their bid has now been strengthened with funding from the DFC.

The loan, to be advanced to the Vodafone-led Global Partnership for Ethiopia, will be used to “finance the design, development, and operation of a new private mobile network provider” provider in the country as well as “the acquisition of a mobile network provider” license, according to the US funding organisation.

“The project is expected to have a highly developmental impact through the creation of a new private telecommunications network that will increase connectivity in Ethiopia while utilising trusted technology.”

Media reports show that the other bidders for the two Ethiopian licenses include South Africa’s MTN, Orange, Etisalat from the United Arab Emirates and Strive Masiyiwa’s Econet.

Ethiopian officials said the licences up for grabs does not include mobile financial services, which could have been a key strength for the consortium as Safaricom already has a pioneer mobile money service, M-Pesa.

The winning bids are scheduled to be announced two weeks after the process closes.

The DFC is also supporting Liquid Telecom’s quest for a bigger share in Africa’s datacentre market and has availed US$300-million into Liquid subsidiary Africa Data Centres.

The financing, earmarked for “supporting development of datacentres across Africa” will support ADC’s “acquisition and expansion of existing datacentre assets in South Africa and Kenya” which are its current markets, in addition to Nigeria, a key hub for its West Africa expansion plans.

The DFC said, “This financing will also enable entry into new markets through the development, construction and operation of datacentres in DFC-eligible African countries, increasing connectivity and supporting economic development.”

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