Safaricom Ethiopia has agreed in principle to share the cell sites and tower assets of incumbent Ethio Telecom, but a deal has yet to be finalised
In May last year, a consortium led by Safaricom won a telecoms operating licence in Ethiopia for roughly $850 million, intending to break up the monopoly of existing state-backed operator Ethio Telecom for the first time.
Building out a mobile network from scratch is not something that can be done quickly. The company has already begun work on rolling out infrastructure in major cities, with a wider deployment to follow. In February, for example, Safaricom unveiled its first data centre in the Ethiopian capital, Addis Ababa, preparing itself for the surge of data that should accompany its successful commercial launch.
However, broader population coverage will remain a challenge for some time, leaving Safaricom Ethiopia forced to rely upon some form of infrastructure sharing agreement with Ethio Telecom, at least in the short term; indeed, just such an agreement being established was dictated by the licencing agreement itself.
But reaching such an agreement has proven problematic. In fact, Safaricom Ethiopia was expected to launch commercial services this month, but delays in securing the deal with Ethio Telecom have prevented the launch from proceeding to schedule.
Now, it seems that the two companies have finally reached an agreement in principle, though a formal agreement has yet to be signed, according to sources.
“The deal is very important and critical for our commercial viability and launch. Hopefully [we will launch] soon but we don’t have a date yet,” said Michael Joseph, Group Chairman of Safaricom.
The prospective deal will see Safaricom Ethiopia gain access to cell sites, masts and other active elements such as network roaming.
“We have agreed in principle on power-sharing, interconnection and tower sharing but it is not concluded as we are yet to sign a final agreement,” Safaricom Ethiopia public relations and communications manager, Tewedaj Eshetu.
Safaricom Ethiopia is reportedly set to invest $300 million into the business this year, with the company suggesting that they will invest $2 billion in capital over the coming five years.
Earlier this year, the company has already signed a five-year infrastructure lease agreement with Ethiopian Electric Power.
Whether or not Ethio Telecom and Safaricom Ethiopia will be joined by a third operator remains to be seen. The Ethiopian regulator had intended to make a third licence available during its auction last year, but the sole bid of $600 million from South Africa’s MTN was deemed too low and the process was aborted.
At the time, the regulator suggested that they would soon re-auction the licence, but ongoing civil unrest and disruption of the global economy has since seen the regulator postpone the auction indefinitely.