Sources suggest that the ongoing conflict in Ethiopia’s northern Tigray region may be enough to dissuade the telco from making another attempt for the Ethiopian licence
Back in 2020, at the behest of prime minister Abiy Ahmed, the Ethiopian regulator announced that it would be making two new operating licences available, breaking Ethio Telecoms monopoly and opening up the country to foreign telcos for the first time.
After much delay and speculation, the bidding process finally began earlier this year, attracting attention from some of the industry’s largest multinational players.
In May, the regulator announced that only two bidders remained for the two licences: a Safaricom-led consortium, including Vodafone, Vodacom, CDC Group, and Sumitomo; and South African giant MTN.
The consortium, known as the Global Partnership for Ethiopia, subsequently won the first of the two licences with a winning bid of $850 million.
For MTN, however, their offer of $650 million was deemed insufficient, with the regulator choosing instead to retender the second licence.
There are a number of reasons for the lacklustre bid from MTN and, indeed, the rest of the licence competitors bowing out of the bidding process. First and foremost among these was the regulator’s decision that the new market entrants would be restricted from launching their own mobile money services, something which has been enormously lucrative in other markets throughout Africa. Instead, Ethio Telecom has since launched their own mobile financial services, Telebirr, which was recently announced to have reached 6.58 million subscribers, less than 3 months after launch.
Prime Minister Abiy would later announce that the new entrants will, in fact, be allowed to launch their own mobile finance services after a year has passed, but by this time the damage had already been done to the bidding process.
The second factor was the ongoing civil war in Ethiopia’s northern Tigray region, which has so far claimed over a thousand lives. The Ethiopian government has a history on communications network crackdowns during periods of unrest, making investing in the country at such a volatile time a risky prospect.
It is this ongoing situation that may yet dissuade MTN from making a second bid for the licence, suggest anonymous sources, who also noted that the filling of a giant dam on the Nile could raise tensions with Ethiopia’s sub-Saharan neighbours.
The sources suggest that MTN would need to build between 7,500 and 8,000 new mobile towers to expand services, a process which could easily become delayed, and equipment damaged during the ongoing conflict.
Ethiopia’s regulator is, nonetheless, adjusting the terms of the auction for the second licence in an attempt to make bidding more appealing. However, with the conflict ongoing and mobile financial services remaining off the table for at least a year, the future of Ethiopia’s second operating licence remains in flux.
In related news, as part of Ethiopia’s liberalisation process, the government is also selling a 40% stake in incumbent Ethio Telecom, with Orange a notable interested party.
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