Safaricom bids for Ethiopia telecom licence

Safaricom Chief Executive Peter Ndegwa.

Safaricom Chief Executive Officer Peter Ndegwa.

Photo credit: File | Nation Media Group

What you need to know:

  • Ethiopia is expected to assess the bids within a one-month window and announce the successful firms by May.

Safaricom #ticker:SCOM has made a formal bid to get a licence to operate in Ethiopia — one of the world's last major closed telecoms markets, the company announced on Monday.

In a notice to shareholders, the telco said it is submitting its proposal through a consortium it is leading with its parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan's Sumitomo Corporation.

Ethiopian authorities had told the Business Daily earlier that the Horn of Africa nation would award two telecoms licences to multinational mobile companies next month after pushing forward the deadline in response to requests for extension from interested bidders.

 “The ECA has indicated that proposals from interested bidders must be submitted by 26th April 2021, and the successful bidders will be announced within thirty (30) days (subject to timings subsequently advised by the ECA),” said Safaricom on Monday.

The Ethiopian government is expected to assess the bids within a one-month window and announce the successful firms by May.

The request for proposal for the two new licences was launched on November 27 last year and some 12 firms including Safaricom expressed interest.

“Any interested and competent operator from any part of the world can take part in the bid irrespective of taking part in the expression of interest (EoI) phase that was carried out in June 2020,” ECA director-general Balcha Reba told Business Daily in February.

Ethiopia’s nascent telecommunications sector is considered one of the most lucrative in the economy as the once inward-looking country opens up to foreign investment for the first time.

Players like Safaricom are attracted by the growth potential in the Ethiopian market, whose 100 million population offers a penetration rate of 44 per cent.

The Safaricom consortium, if successful, will likely rely on funding from deep-pocketed foreign investors such as the US International Development Finance Corporation (DFC) and CDC given the size and international nature of the Ethiopia investment.

South Africa's Vodacom and United Kingdom's Vodafone own a combined 40 per cent stake in Safaricom.