Balcha Reba - Afrikan Heroes

Ethiopia To Welcome New Telecom Entrants February

January 2, 2023

Balcha Reba, director-general at the Ethiopian Communications Authority

The Ethiopian Communication Authority (ECA) is planning to release an expression of interest for a third telecom provider in early February 2023, according to the authority’s Director General.

This follows the authority’s publication of a call for stakeholder engagement for the third telecoms operating licence on November 16, 2022.

“ECA has now resumed the licensing process for a third license or the second new full-service nationwide telecommunications license,” said Balcha Reba, ECA Director General, indicating that the country has huge potential to serve an additional telecom operator. “We have invited different international consultation companies to evaluate the document,” he added.

As stated by Balcha, “Preparations are underway to float an expression of Interest to bring potential investors who can acquire the third licence or the second new full-service licence.” The regulator has been keen to invite potential bidders and any interested parties to participate in a consultation process.

The licence will be granted through a competitive procurement procedure, per the stakeholder consultation paper, and it will happen in the first quarter of 2023.

Similar to this, it will post an expression of interest in early February that will remain up for a month after evaluating the coverage of all answers from stakeholders for the upcoming month. Regarding other financial endeavours, it is claimed that after meeting the National Bank of Ethiopia’s conditions, the prospective new entrant will be permitted to offer mobile financial services.

In order to advance the implementation of the government’s economic reform agenda and to increase competition in the telecommunications sector in the context of bettering market conditions, the government announced its decision to move forward with the reform of Ethiopia’s telecommunications sector in October 2018.

In June 2020, the government put out a request for proposals for two extra telecom licences, and after only one new operator was chosen, the ECA cancelled the B bid for the other licence.

Following the cancellation, on September 28, 2021, ECA released a Request for Proposal (RFP) for the second brand-new full-service countrywide Telecommunications Service License, and the bidding process was still active at that time. However, the procedure came to an end in December 2021 after ECA announced that the bidders had temporarily withdrawn their bids. In a message to the industry, ECA stated that it had received “concerns and requests from multiple prospective bidders to delay the process” regarding the follow-up.

After failing twice, the bid is now refloated for a third time.

On May 31, 2021, the ECA granted the Global Partnership for Ethiopia (“License A”), a private partnership made up of Safaricom (Kenya), Vodafone Group (UK), Vodacom Group (South Africa), CDC Group (UK), and Sumitomo Corporation (Japan), now doing business as Safaricom Telecommunications Ethiopia, Ethiopia’s first-ever competitively-tendered Unified Telecommunications Operator License.

The government is currently selling a 40% interest in the publicly traded Ethio Telecom.

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DFC And Mastercard To Provide $50M To Drive Digitalization And Financial Inclusion In Africa

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard

Ethiopia Awards First Private Telecoms License To Kenya’s Safaricom

May 23, 2021

The Ethiopian government has granted the Ethiopian Communication Authority permission to grant a license to Global Partnership for Ethiopia, a consortium led by Safaricom and consisting of Vodafone, Vodacom, Safaricom, and Sumitomo Corporation. The consortium will pay $850 million for the license and will spend $8.5 billion.

*Balcha Reba, director-general of the Ethiopian Communications Authority*

“We will soon open a bid for the remaining licence,” said Balcha Reba, director-general of the Ethiopian Communications Authority speaking to Reuters.

MTN, the other competitor, bid $600 million but did not receive the license.

A Look At The Winning Consortium — Global Partnership for Ethiopia

Making up the winning consortium is Vodafone, a British multinational telecommunications firm which has partnered with Vodacom, Safaricom, CDC Group, and Sumitomo Corporation.

While South Africa’s Vodacom will have a 6.2 percent stake in the consortium, Safaricom, a Kenyan telecommunications behemoth will retain 56% and consequently be the lead partner in the bid. Sumitomo will, however, own 25% of the company while the CDC Group — the UK’s development finance institution — is expected to hold 10% of the new consortium’s shares.

“The respective consortium members may invest through special-purpose investment vehicles for structuring purposes,” Safaricom said of the new Ethiopian entity’s structure to Reuters.

Safaricom Most Likely To Launch Its Mobile Money Arm, M-PESA In Ethiopia Soon

The newly granted license will mean so many things for Safaricom, including the launch of its famous mobile money brand, M-PESA in Ethiopia.

This follows a recent review of its previous position on foreign participation in Ethiopia’s mobile money services by the ECA. Hence, for the first time in history, the country would be letting foreigners into its financial services. According to a source, the proposed new telecom licenses will enable licensees to sell mobile money services. They will also not be limited to using Ethio Telecom’s infrastructure, according to the same source.

Notwithstanding the expected entry of Safaricom into mobile money services, Ethio Telecom, the state-owned telecoms outfit had proceeded to launch Telebirr, its mobile money service recently. Ethio Telecom’s Telebirr is already available to the company’s over 53 million customers.

Ethiopia had received harsh criticism from a number of authorities, including the World Bank in February, for its policy of prohibiting new operators from offering mobile money and restricting infrastructure competition.

Despite the latest move to allow foreign participation in the provision of mobile money services, Ethiopia (which is Africa’s second most populated country after Nigeria) continues to place a bar on foreigners owning stakes in banking, insurance, brokerage services, and legal consultancy businesses.

In October 2020, after series of negotiations and deliberations, the National Bank of Ethiopia (NBE), finally granted a license to state-owned telecoms company, Ethio Telecom, to start mobile money service in the country. This followed the issuance, in April 2020 by the bank, of a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulation allowed mobile money transactions.

The regulation has also opened up the country’s financial services sector to include that a licensed payment instrument issuer 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.

The National Bank of Ethiopia also issued, that same year, a “Licensing and Authorisation of Payment System Operators Directive (ONPS/02/2020), allowing financial technology companies (fintechs) to start off payment processing and related services in Ethiopia.

Five licenses under the payment system operator directive include National Switch, Switch Operator, ATM Operator, POS Operator, and payment gateway license.

Although not yet there, it does seem that the days of bar against foreign participation in the country’s financial services sector are numbered.

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Foreigners Are Still Not Allowed To Participate In Ethiopia ’s Financial Services Sector Under New Rules

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