Ethiopia raises US$850 million from historic telecommunications auction

Ethiopia has granted the first $850 million telecommunications license to a consortium including British Vodafone, which may herald the beginning of the opening of Ethiopia’s closed economy.

The consortium led by Kenya’s Safaricom and Vodafone and Vodacom also includes the British financial development agency CDC and Japan’s Sumitomo. South Africa’s MTN bid for the second license at a price of $600 million was rejected because the bid was too low and the license would be re-bid.

The Ethiopian government has announced that in this rapidly developing country with a population of 114 million, the way to open the world’s largest remaining telecom monopoly business is to: “Deal of the Century”.

However, restrictions on the provision of lucrative mobile money services and the government’s insistence on requiring new operators to build their own infrastructure or lease infrastructure from the state-monopolized Ethio Telecom instead of using third-party tower operators have delayed potential bidders.

Some bidders are also considered to be wary of this. Unstable political situation Last November, after the EFF moved the government of the Tigray region.

According to telecom analysts, companies that initially showed strong interest, including Orange in France and Emirates in the United Arab Emirates, are expected to conduct a second review when renewing their licenses.

Since the initial bidding ended, the government has relaxed its opposition to mobile money, saying that new operators will be able to provide such services within a year, subject to approval from the central bank.

Prime Minister Abiy Ahmed (Abiy Ahmed) said in a tweet on Saturday that the consortium led by Safaricom is the largest foreign direct investment in the country’s history. For most of the past 20 years, Ethiopia’s country-led development model inspired by Asia has prevented foreign capital from controlling the “commanding heights” of the economy such as banking and telecommunications, and its growth rate has reached almost double digits.

Abi said that the new consortium will invest more than US$8 billion to build a network in the next ten years.

Brook Taye, a senior adviser to the Ministry of Finance and a member of the privatization team, said that the successful consortium also promised to launch a low-orbit satellite covering the entire country by 2023. The new investment will create between 1.1 million and 150 million US dollars, he said, I have a job.

A person familiar with the bidding process said that the hope to publish good news before the national election next month has prompted fictitious investment and employment numbers. The person familiar with the matter said: “If you invest $8 billion, you will never be able to make money.” “I think they just came up with numbers out of thin air.”

Safaricom has approximately 5,500 employees in Kenya. The country’s economy is similar to Ethiopia’s, about 95 billion U.S. dollars, and a population of 52 million, which is less than half the size.

However, Safaricom’s sustainability report stated that its service provided 1 million people with jobs through its “wider economic impact,” a figure that takes into account entrepreneurs who can make a living using the telecommunications ecosystem.

Brooke said that the second driver’s license will be updated “soon” and the rules may be further adjusted to make it more attractive. Potential bidders in the first round complained about changes to the rules, including a lack of clarity on interconnection fees, and these bids were cut shortly before the bidding came.

Brook denied that the tender was opaque. He said: “This is the most transparent process in Ethiopia’s history.” He said that the industry will further open up, “so we think there will be a very successful second bid.”

Ethiopia also plans to sell a 40% stake in Ethio Telecom, which has 46 million subscribers, later this year.

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