Last June, Safaricom, alongside 11 other international telecommunications companies submitted their applications with the Ethiopian Communications Authority (ECA) for full-service telecommunication licenses in Ethiopia, a month after the Authority had invited interested firms to submit their Expression of Interest (EoI). Now, after so many adjustments to the timelines, the list is down to just six and Kenya’s Safaricom is on it.
And although the Ethiopian Communications Authority is yet to disclose which of these firms have been dropped from bidding, Safaricom’s appearance on the list is not a surprise. The company had, last year, signed an agreement to borrow up to $500 million (Sh55.7 billion) from the US International Development Finance Corporation (DFC) to fund its expansion to Ethiopia. Safaricom is also seeking the telco license in Ethiopia under a consortium capacity, further boosting its chances of scaling through. The company had previously said it was prepared to take on more debt in its position as the consortium’s majority shareholder with a 51 percent stake. In the joint venture, Vodacom has a five percent stake, with the remainder of the ownership shared among undisclosed strategic financial investors.
The initial full list of the 12 applications included:
- Global Partnership for Ethiopia (a consortium of telecom operators made of Vodafone, Vodacom, and Safaricom)
- Etisalat
- Axian
- MTN
- Orange
- Saudi Telecom Company
- Telkom SA
- Liquid Telecom
- Snail Mobile
- Two non-telecom operators — Kandu Global Telecommunications and Electromecha International Projects.
The shortlisted firms will be required to submit their technical and financial bids by April 5, compared with a previous deadline of March 5.
“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.”
Plans have been on since October 2019 to allow two private companies to take 40% stake in the Ethiopian telecom market.
Read also: Ethiopia’s Only Telecom Company Ethio Telecom Finally Goes Mobile Money
Safaricom’s Famous Mobile Money Arm, M-Pesa, Will Not Be Allowed To Operate In Ethiopia Even If The Company Finally Wins The Telecom License
In April 2020, the National Bank of Ethiopia issued a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulatory regime allowed mobile money transactions.
The regulation further opened up the country’s financial services sector to include that a licensed payment company may, with the relevant agreement with regulated financial institutions and pension funds, be allowed to provide micro-saving products; micro-credit products; micro-insurance products; or pension products in the country. Banking, insurance, brokerage services, and legal consultancy, however, still remain off limits for foreign investors, according to a new set of investment rules published on the Ethiopian Investment Commission’s website. The implication of these is that the two telcos that will be selected from the ongoing licensing process in Ethiopia will not be allowed to engage in mobile money services.
“When the telecom sector is liberalised,” said CEO of Ethio Telecom, Frehiwot Tamiru, at a consultative meeting Ethio Telecom held with IT and startup companies last year, “there are guiding policies and directives. We are not opening up completely.”
A 2018 report by the GSMA has described Nigeria, Ethiopia and Egypt, home to a combined adult population of over 242 million, as Africa’s mobile money sleeping giants.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer