The Vodafone consortium consisting of Vodafone, Vodacom, Nairobi-based Safaricom Ltd., Sumitomo Corp. and British development finance agency CDC Group has emerged as the winner of a new telecommunication license in Ethiopia.
The Vodafone consortium’s bid of $850 million was accepted over MTN consortium‘s bid of $600 million. Balcha Reba, director-general of the Ethiopian Communications Authority said that MTN’s offer of $600 million was deemed too low. With this acceptance, the winning consortium is to invest $8.5 billion in their network during the coming 10 years, including the license fee.
The government called off the sale of a second new permit, but says it will invite fresh bids from international wireless carriers after some policy adjustments.
According to Brook Taye, a senior adviser at the Ministry of Finance, “”With over $8 billion total investment, this will be the single largest FDI (foreign direct investment) into Ethiopia to date.”
“The company will enter a commitment of creating 1.1 million jobs in 10 years and cover the country with a 4G service by 2023,” he added.
Ethiopia has a population of more than 110 million, the second-largest in Africa, yet less than half its people have mobile-phone subscriptions.
In 2019, the government announced plans to award telecommunication licenses to two foreign companies that will set them in direct competition with Ethio-Telecom which is government-owned. This was aimed at increasing private sector participation and flow of private capital into the country’s economy.
The Ethiopian government is also preparing to sell a 45% stake in state-run mobile operator, Ethio Telecom. Earlier this month, the operator launched a mobile money service. With mobile banking, Ethio-telecom aims to tap into the potential US $ 13 Billion market by 2025.
