Safaricom pays $850m telecom licence fee to begin operating in Ethiopia

Safaricom CEO Peter Ndegwa

Safaricom CEO Peter Ndegwa during the telco's 20-year anniversary celebration at the Serena Hotel in Nairobi on October 27, 2020.

Photo credit: Diana Ngila | Nation Media Group

Safaricom consortium has paid the $850 million licence fee needed to start providing telecom services in Ethiopia.

Mr Balcha Reba, the director-general for Ethiopia Communication Authority told Nation.Africa that the consortium settled the fee on Wednesday. Safaricom won the bid last month after fronting the $850 million for the license, beating the $600 million bid by MTN.

The firm pledged to invest $8 billion in Ethiopia over the next ten years, becoming the first foreign firm to enter Ethiopia for telecom services.

 The official said the new telecom operator in Ethiopia also calling itself Global Partnership for Ethiopia, according to the law, had signed a licence agreement seven days after being announced as winner.

 It had also to make the total licensing payment 14 days after the winner is announced.

"Now, the consortium has paid the 850 million USD licensing fee to the Ethiopian government via the National Bank of Ethiopia without any pressure under the signature of the provider and license winner," the director-general said.

 When Nation.Africa asked the official when the Safricom led group would start operation in Ethiopia, he said: "They might need up to 6-9 months pre-operational period but certainly they will be fully operational in early 2022"

 Safaricom pledged to invest $8 billion in Ethiopia over the next ten years, becoming the first foreign firm to enter Ethiopia for telecom services.

 Nation had learnt that, with over $ 8 billion total investment and 850 million USD licensing fee, the investment to be made by the Global Partnership for Ethiopia group will be the single largest FDI into the horn of Africa's nation to date.

 According to Engineer Balcha, Ethiopia will announce an auction for the remaining second licence in the next few months by including new policy directions.

 Entrance of the telecom companies will bring lots of benefits to Ethiopia including new technologies, huge investments, significant job opportunities, and the construction of various telecom infrastructures.

 Mr Zemedeneh Nigatu, an economist, says opening up the telecom sector not only provides quality services at a lower cost, but it also opens the door to job creation and competition.

 Finance Minister Ahmed Shede said the decision is an important step in the country's economic transformation process.

"This will enable all Ethiopians to have the same quality of services at affordable prices," he said.

 Adviser to the Ethiopian Minister of Finance, Dr Biruk Taye, said that the selected company will provide 4G and 5G internet services. 

 He also said that backed by a satellite, the consortium will provide 4G internet coverage to the entire country within two years as part of its initial goal.

 According to Dr Biruk, the group of companies will create up to 1.5 million new jobs over the next ten years.

 As part of its home grown economy reforms, Ethiopia, Africa’s second most populous country, eyes the digital economy to contribute about 6.6 percent to GDP by 2030.