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Ethiopia
COUNTRY FOCUS
Mixed messages from a major market Ethiopia has long claimed that it plans to open up a number of state-run sectors to private investment. One of the most attractive is undoubtedly telecommunications. Phil Desmond looks back at how this story has developed.
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Is entering the telecoms market in Ethiopia an opportunity or a risk?
T
O SAY THERE has been a lot of telecommunications news from Ethiopia recently would be something of an understatement. Barely a day passes without an update from a country that is finally opening up its telecommunications sector to competition, albeit slowly and, some would say, erratically. It was back in 2018 that the government announced plans to allow domestic and foreign investors to acquire minority holdings in the state-run operator Ethio Telecom, the country’s only operator at the time. Then, in mid2020 the government announced plans to award mobile licences to two new players. Big names like MTN, Orange and Vodacom had shown interest in entering the market well before this, so the response looked like being a positive one. However, the operators didn’t get to set the rules. The lack of permission to offer mobile money services was one of the earliest issues. Nevertheless, despite the fact that Airtel withdrew from the bidding process at a fairly early stage, some newspaper reports suggested that Orange looked a likely participant as did Axian, MTN, Saudi Telecom 26 Communications Africa Issue 5 2021
Company, Telkom SA and Liquid Telecom. In the end only MTN and a consortium of Vodafone, Vodacom and Safaricom took part. The winning bidder was the Safaricomled consortium. It offered to pay $850 million for its licence. MTN’s $600 million bid, was deemed too low but, at the time, MTN chief executive Ralph Mupita suggested that MTN might reapply should the Ethiopian government reissue the licence and permit mobile money services. Which the government did. The licence-winning Safaricom-led consortium was also permitted to offer mobile money services. But MTN decided not to bother after all. Meanwhile Ethio Telecom launched its own mobile money service – called Telebirr. This was rumoured to have passed the 10million-subscriber mark by late September, buoyed up by zero-rated transfers and ease of loan access. Other services are now being assessed, including an international remittance service system. Safaricom’s M-Pesa is not
set to launch before next May, giving Telebirr a chance to snap up even more customers. Meanwhile the – potentially – very attractive prospect of gaining a stake in Ethio Telecom is under way after the government launched a tendering process for the proposed sell-off of a 40% stake in the state-owned carrier to private investors. It’s worth noting, however, that over a year ago attempts by the Ethiopian Communications Authority (ECA) to bring in foreign telecom infrastructure firms were said to have angered Ethio Telecom, whose executives had argued that it had spent billions of dollars on infrastructure across the country in recent years and should be able to profit from leasing towers to any new operators that are licensed. The government then suspended the entry of foreign telecom infrastructure companies into the country. There is movement in other sectors too. In late 2019, First Brick Holdings announced it is
The lack of permission to offer mobile money services was one of the earliest issues.
establishing and investing in Raxio Ethiopia, which will build and operate the first state-of-the art, privately owned data centre in Ethiopia. RedFox Web Solutions, ScutiX and wingu.africa look like they will also be implementing data centres in the country. As for the chances of a second new entrant into the market after Safaricom, requests for proposals for the second national telecoms licence have been reissued with a deadline for delivery of 20 December. Balcha Reba, director general of the ECA, was quoted as saying "Following our successful first license issuance earlier this year ... we now want to encourage more telecoms operators, of all sizes, to be part of this exciting opportunity." But how exciting will it be with mixed messages coming from government about freedom to compete – let alone the uncertainty caused by the ongoing conflict between federal troops and the Tigrayan Peoples Liberation Front? However, this is Africa’s secondlargest country, home to more than 115 million people. Even a constrained opportunity may seem attractive in a market of that size. ✆ www.communicationsafrica.com
