Ethiopia has awarded a new telecommunication license to a consortium including Safaricom and the Vodafone Group, paving the way for an opening of the sector to outside investors.
The two companies will invest Ksh. 87 trillion ($805 billion) in their network during the next 10 years, including licence fees. According to reports, the consortium had submitted a bid of Ksh. 91.97 billion ($850 million) for the permit.
The Ethiopian government also called off the sale of a second new permit, but will invite fresh bids from international wireless carriers after some policy adjustments.
“The companies will enter a commitment of creating 1.1 million jobs in 10 years and cover the country with a 4G service by 2023,” said Brook Taye, a senior adviser at the Ministry of Finance in Ethiopia.
The Ethiopian government disclosed that it had received 2 offers, the other was from MTN from Johannesburg, and partners including the Silk Road Fund, a Chinese state investment group.
The decision to open up the telecom industry was taken in mid-2018 and seen as central to Ethiopian Prime Minister Abiy Ahmed’s plans to reform the economy. But the process has been hit by numerous setbacks, including the coronavirus pandemic, delayed elections and the regulatory complexity that comes with organizing the sale.
Ethiopia has a population of more than 110 million, the second-largest in Africa. However, less than half of its population have mobile-phone subscriptions. However, certain conditions of the auction weakened the proposition, including the requirement to use state-owned telecom towers and an initial block on issuing mobile-money licenses.
Some investors may also have been put off by a recent civil war in the northern Tigray region, which has raised humanitarian concerns in the U.S. and the European Union, among others.