Summary : Ethiopia Telecommunication License Bid

Last Wednesday, April 26, The Ethiopian Communications Authority has announced the two bidders for the two nationwide telecommunications licenses that

May 1, 2021

Anteneh

Addis Ababa, Ethiopia

Last Wednesday, April 26, The Ethiopian Communications Authority has announced the two bidders for the two nationwide telecommunications licenses that Ethiopia is licensing. This is following to ECA’s request for a proposal for the bid that was announced in 2020 November. The result of the bid is expected in two weeks.

The official bidders are known – Global Partnership for Ethiopia ( a consortium of telecom operators made up of Vodafone, Vodacom, Safaricom & Sumitomo Corporation) and the South African telecom operator MTN.

What else do we know about the process, the bidders, new development after the bidder name is disclosed? Here is a quick coverage of other key things you might have missed.

MTN Group Partnered With Silk Road Fund and Other Undisclosed Partners

MTN, the largest mobile operator in Africa by subscribers, submitted a bid along with other equity partners that include the Silk Road Fund from China. MTN said they will disclose the other partners as the process progress.

Silk Road Fund is China’s state-owned development and investment fund that invests in countries involved in Belt and Road Initiative. The involvement of the Silk Road Fund from China is interesting to see when you consider DFC ( U.S. International Development Finance Corporation ) is also providing a loan of up to $500M to Vodafone who is part of the Global Partnership to Ethiopia consortium.

Global Partnership for Ethiopia Consortium

Vodafone, the British multinational telecommunications company is partnering with Vodacom, Safaricom, CDC Group, and Sumitomo Corporation for the Ethiopia bid. Vodafone also secured a from DFC as mentioned above.

Vodacom, the South African operator which is owned by Vodafone majoritively is expected to have 5% ownership.

Safaricom, a Kenyan Telecom giant is a lead partner in Ethiopia’s bid. Safaricom is the lead partner in the consortium. In February, Vodafone told Capacity its Kenyan subsidiary Safaricom “will be the lead partner” in the bid for Ethiopia. In confirmation of that news, ” During an investors conference call, Vodacom Group CEO Shameel Joosub said that Safaricom will have 51% ownership in the Ethiopian telecommunications firm”.

Speaking about the structure of the new potential Ethiopian entity, Safaricom told Reuters that “for structuring purposes, the respective consortium members may invest through special purpose investment vehicles”.

Sumitomo Corporation, a Japanese global corporation with activities in mining, infrastructure, and other industries is also part of the consortium. According to Capacity, the technological support for Ethiopia’s operation will come from Sumitomo. Sumitomo has been working in Myanmar with KDDI ( Japanese telecommunications operator ) and Myanmar state-owned telecommunication operator MPT. MPT partnered with Sumitomo and KDDI in 2014 right after Mynamar liberalized the telecommunication sector and awarded Norway’s Telenor and Qatar-based Ooredoo a new Teleco license. The goal of the partnership was to bring operational excellence to MPT through funds, technology, and operational expertise that will be contributed from the partners.

CDC Group, UK’s development finance institution is also part of the consortium.

How About Other Operators That Have Shown Interest?

From more than 9 operators/team of operators that have expressed interest, only two have submitted a bidding document. According to Reuters who spoke to Brook Taye, a senior advisor at the Ministry of Finance, it looks like at least two players ( Orange and Etisalat ) are more interested in participating in the Ethio Telecom partial privatization which is expected to sell 40% of the state corporation stake. The other providers including Axian, Saudi Telecom, Telcom SA, Liquid Telecom, and Snail appear to have not able to submit a bid.

Safaricom Warns Investors

According to a report by Kenyan Wall Street, ” Safaricom is warning investors to exercise caution while trading its shares on the Nairobi Securities Exchange, as the telco giant awaits results from the bidding,”. This warning was posted on Monday, April 24.

The warning looks like it is aiming to alert investors to the potential positive or negative sentiment that could come from new information. It appears Safaricom was referring result of the bidding process for the Ethiopia Teleco license.

Safaricom Share Hits All-Time High on Ethiopia Bid

One day after the announcement of official bidders, Safaricom’s share hits an all-time high which is trading on Nairobi Securities Exchange (NSE). On Wednesday, Safaricom shares closed with the price of Sh39.9. According to Bussiness Daily, ” This pushed the telco’s market value to nearly Sh1.6 trillion – the highest level since the company started trading on the Nairobi Securities Exchange (NSE) on June 9, 2008.”

Did You Know?

The Telecos that will win the bid

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Anteneh

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