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Operators from around the world are chomping at the bit to enter the Ethiopian mobile market, but new limitations put in place will make an entrance much less attractive
Ethiopia is currently undergoing major upheaval, when a political move from Prime Minister Abiy Ahmed in November resulted in an armed uprising in the country’s northern Tigray region. The ongoing conflict has resulted in perhaps thousands of casualties.
But, despite this period of civil unrest, two weeks ago the government said it would be moving ahead with auctioning new telecoms licences in December, allowing foreign operators to enter the country for the first time.
As one of the only remaining telecoms monopolies worldwide and with a population of around 110 million people, Ethiopia is viewed by many as a telecoms honeypot, with a market poised for incredible growth. This has led to enormous reported interest from companies including MTN, Orange, STC, and a Vodafone-led consortium.
However, in a sense, we may be seeing the Ethiopian regulators letting this immense interest go to its head, with reports suggesting that the latest stipulations for new entrants will impose some crucial limitations.
Perhaps the biggest blow is suggestions that the new mobile players will not be allowed to offer mobile banking services, drastically reducing the value of their entry into the market. Throughout Africa, mobile financial services are a huge moneymaker for telcos; M-Pesa, for example, handled around $82.9 billion in transactions this year, earning owner Safaricom around $329 million in revenue. Being denied the opportunity to offer similar financial services to Ethiopia’s huge population will be a major disappointment to say the least.
Secondly, the new entrants will have to lease towers from Ethio Telecom and will not be allowed to invite third parties to build infrastructure on their behalf, as is common practise elsewhere in Africa.
Combined, these limitations mean that the opportunity to enter Ethiopia may not be as exciting as first believed, potentially leading to significantly lower bids than the billions of dollars predicted by the Ethiopian government.
Just days ago, the government clarified that it would offer just two new telecoms licences, with a fourth operator not set to be allowed to enter the market for the next decade. Final bid submissions are expected at the start of March 2021.
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