Ethiopia to reopen bidding for a second telecoms operator license this month.

August 3, 2021

Ethiopia began a tendering process on June 14 for the proposed sale of a 40% interest in state-owned carrier Ethio Telecom to private investors, as part of the government’s larger goal to open up the nation’s economy. Ethiopia is aiming to license private operators to compete with Ethio Telecom as part of a broader opening up of the sector. Two senior government officials said on Aug 02 that Ethiopia will reopen bidding for its second telecoms operator license this month, which includes the right to operate mobile finance services. In May, the Horn-of-Africa country sold only one of two full-service licenses on offer, citing a lower-than-expected price for the other, which it now wants to re-sell. “We have made several improvements that can improve its worth,” Balcha Reba, director-general of the Ethiopian Communication Authority, told Reuters. According to Brook Taye, a senior adviser at the ministry of finance, the International Finance Corporation, the World Bank’s private sector arm, will serve as a transaction consultant in the agreement. Prospective bidders are expected to include companies who have shown interest in the previous attempt to sell the license but whose bids were judged insufficient, according to Brook. “We expect to have a strong interest,” he said. The first license was awarded to a consortium led by Kenya’s biggest operator, Safaricom (SCOM.NR). MTN (MTNJ.J) of South Africa had also bid in the first round but was not successful in obtaining a license. Safaricom’s winning bid of $850 million could serve as a guide for the price of the remaining license. “At the very least, there is a threshold, and we are working on revising the policy to raise this benchmark,” Brook added, highlighting the automatic inclusion of the authority to conduct mobile banking services, which was not included in Safaricom’s license. Since Safaricom pioneered mobile financial services with M-Pesa in 2007, providing users with an alternative to banks, mobile financial services have become an important element of African telecom providers’ businesses. Ethio Telecom, the state monopoly, launched Telebirr, a new mobile finance service, in May and within weeks had gathered 4 million customers, demonstrating the market’s potential. A separate sale of a 40% share in Ethio is now underway, as part of a push to liberalize the industry and the larger economy.

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