Foreign investors line up for Ethiopian telco stake

Foreign investors line up for Ethiopian telco stake


Ethiopia has received 12 expressions of interest (EoI) from nine telecom and two non-telecom operators looking to secure a partial stake in the country’s telecommunications industry.

The Ethiopian Communications Authority (ECA) said bids had been received from nine telecom operators: Etisalat, Axian, MTN, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, and Global Partnership for Ethiopia, a consortium of telecom operators comprising Vodafone, Vodacom, and Safaricom.

A further two non-telco operators, Kandu Global Telecommunications and Electromecha International Projects, also submitted EoIs.

Ethiopia as one of the last countries in the world with a complete monopoly over telecommunications services and the licensing is part of the government’s commitment to liberalise the country’s telecoms and ICT infrastructure. The country reportedly needs US$2.2 billion in investment to bring services up to scratch. 

The number of mobile subscribers in the country has grown from 17.2 million in 2011/2012 to 40.2 million in 2017/2018, a CAGR of 13% per annum, according to Ethio Telecom’s 2019 annual report.

“The Ministry of Finance and ECA would like to thank all those potential bidders who have responded to the request and expressed their interest. As the ECA prepares for the next stage, it will keep the participants informed and engaged as the process moves forward. ECA remains fully committed to fulfil Ethiopia’s telecommunications sector reform and enhance its digital transformation,” a statement read.

Despite the progress however, Ethiopia’s ICT infrastructure remains underdeveloped and a series of projects are required for the country to meet its future communications needs.

According to the International Telecommunications Union’s ICT Development Index, Ethiopia ranks 170 out of 176 countries for ICT infrastructure.

In recent days HIP Consult has released new insight featuring a customised index on the infrastructure layers where investment is needed the most.

Among African countries of comparable size and economy, the report said Ethiopia ranked well below the average number of towers per subscriber, fixed line infrastructure, and data centres, despite the government pledging a new national fibre network only last year.

For example, HIP Consult calculated that the country’s fibre reach is 37%. This means that around one third of the population lives within 5 kilometres of a fibre connection. By contrast, South Africa is at 75%.

The report said there is a need to more than double the existing fibre and tower infrastructure, and add several Tier 3+ data centres to adequately meet existing and future demand.

As reported by Data Economy  First Brick Holdings – a Roha group company investing in East Africa’s digital economy – established Raxio Ethiopia last year to build and operate the first privately owned data centre in the country.

Two investments have been made to date and, in total, five Tier III data centres are due to be live across East Africa by 2022.

Hand in hand with the hardware, the report also stated that good governance, clear regulatory frameworks, and a skilled workforce – as set out in the government’s digital transformation strategy –  would all be needed as more digital services are introduced.

On 2 April, new legislation was announced allow telecommunications companies to step into the non-bank financial services space and bring basic services to mobile customers through their devices.

Currently, only 35% of Ethiopians have access to financial services of some kind and 16 million Ethiopians do not have a bank account, mobile phone or any form of identification.

“We spent several months conducting research with the objective of demystifying the ICT liberalisation process and identifying opportunities for operators, investors, and other players to enter the Ethiopian market,” said Judah J. Levine, CEO of HIP Consult.

The report concluded: “With the Ethiopian government’s efforts to reinvigorate the ICT sector, the time is ripe for investors to consider if and where to participate in the next phase of the market’s evolution and growth.”

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