The process to allocate a third operating licence has been delayed once again, this time at the behest of several prospective bidders
Motivated by Prime Minister Abiy Ahmed, in 2020 Ethiopia’s telecoms regulator, the Ethiopian Communications Authority (ECA), announced that it would introduce two new players to the Ethiopian telecoms market, breaking up one of the last telecoms monopolies in the world.
With a large, young population with rapidly increasingly digitalisation, Ethiopia was viewed as a goldmine for telecoms operators, with the early parts of the year seeing much speculation and interest from international players around the world.
However, the bidding process for the licences themselves was slow going, delayed by the coronavirus pandemic, civil strife in the Tigray region of Ethiopia, and legal disputes. By May 2021, only two bidders remained: a consortium, known as the Global Partnership for Ethiopia, comprising Safaricom, Vodafone, Vodacom, CDC Group, and Sumitomo; and South Africa’s MTN.
The consortium won the first available licence, having bid around $850 million. However, MTN’s bid of $650 million was deemed too low, with the regulator cancelling the tender process and promising to reauction the second licence. After yet more delay, it was announced that bidding for this second licence would take place from October 2021 until December 20th, with the winner to be announced in January.
The December application deadline passed with no announcements from the ECA, but just two days later, on December 22nd, the regulator announced that it had decided to pause the tender process once again, following requests from numerous potential bidders.
The ECA now says that the process will resume at “a more convenient time in future”, without suggesting a specific timetable.
Why exactly bidders have requested a pause is unclear. One factor that seems likely to play a part in the decision is the civil unrest in the Tigray region, with violence escalating towards the end of the 2021. For potential operators, the civil war represents a significant challenge, with Ethiopia well known for issuing government orders to shut down networks during internal conflicts. In addition, new entrants will have to build a large number of mobile sites, with some sources suggesting that between 7,500 and 8,000 will be required, the deployment of which will surely be hindered by the ongoing conflict.
But while potential suitors for Ethiopia’s third operator position are happy to wait, the Global Partnership for Ethiopia is moving ahead with its launch plans, suggesting in December that it was still on track to launch commercial services in March this year.