Ethiopia: Multinational telcom giants jostle for full-service licence

Twelve multinational telecom giants will soon find out which among them wins one of two new full-service telecommunication licences to operate in Ethiopia.

The Ethiopian government is expected to request for proposals before the end of November. The Ethiopia Communications Authority (ECA) has completed the evaluation of expressions of interest submitted in June by the 12 companies.

Kenya’s telco giant Safaricom, whose interests are through a consortium dubbed Global Partnership for Ethiopia in partnership with Vodafone and Vodacom, is hopeful of being among the two companies that will be invited to submit a request for proposal.

“We are ready to go and we are waiting for the request for proposal.,” Safaricom chairman Michael Joseph told The EastAfrican.

He added that the consortium is ready to abide by the conditions that will be imposed by Ethiopia, top of which is barring new entrants into the country from investing in telecoms infrastructure such as base stations and towers.

According to Mr Joseph, the Ethiopian market offers substantial potential considering its mobile penetration rate currently stands at 45 percent in a country with a population of 110 million people.
Safaricom is looking beyond Kenya after hitting saturation in the voice business, with growth largely driven by data and mobile money service M-Pesa whose drop in earnings for the six months period ending September 30 resulted in a decline in profitability for the first time since 2012.

Its half-year profits declined by six percent to $300 million compared with $318.2 million in the same period last year.

In August, Ethiopia said telecommunication infrastructure providers (towercos) would not be allowed in the country, while operators must share infrastructure.

“The government has decided not to allow foreign telecom infrastructure companies. They will not be allowed to operate here,” Frehiwot Tamiru, Ethio Telecom chief executive, said in August.

The country has drafted a framework to govern infrastructure sharing and collocation agreements, with the key design being to protect the vast infrastructure being controlled by Ethio Telecom, the country’s telecoms monopoly.

The other companies that had submitted an expression of interest were 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.

According to John Walubengo, an IT lecturer at Multimedia University, while Ethiopia offers a huge market for voice and data, the M-Pesa service could be the biggest beneficiary by riding on Ethiopia’s nascent financial market.