Vodafone alliance ‘to spend $8bn’ on building Ethiopia network
Vodafone will spend US$8 billion on building its new network in Ethiopia, according to the country’s prime minister, Abiy Ahmed.
He said at the weekend, shortly after announcing the contract’s award to the Vodafone consortium, that “with over $8 billion total investment, this will be the single largest FDI [foreign direct investment] into Ethiopia to date”.
Reports say that the Vodafone group paid $850 million for the licence, beating MTN of South Africa, which bid a reported $600 million.
Ethiopia did intend to award two contracts, but only MTN and the Vodafone group offered bids.
MTN said this morning: “MTN Group confirms that we and our equity partners were unsuccessful in a bid for one of two new telecoms licences to operate in Ethiopia. Our bid was guided by strategic and capital allocation disciplines.”
The company added: “Although disappointed with the unsuccessful outcome, we believe we have so much growth and value unlock opportunities ahead for MTN group, so our excitement and focus remains undiminished across the African continent.”
The Vodafone consortium will compete with Ethio Telecom to offer services to Ethiopia’s 112 million people, only 40% of whom currently have mobile phones.
Abiy (pictured) said: “The Council of Ministers has unanimously made a historic decision today allowing Ethiopian Communications Authority to grant a new nationwide telecom license to the Global Partnership for Ethiopia which offered the highest licensing fee and a very solid investment case.”
The Global Partnership for Ethiopia includes Vodafone and two sister companies in Africa, Safaricom, based in Kenya, and Vodacom, based in South Africa, as well as Sumitomo of Japan.
The consortium is backed by the US government’s International Development Finance Corporation (IFC), which has given a loan of US$500 million, and the UK-backed CDC. The IFC earlier this year invested $300 million in Africa Data Centres, owned by Liquid Intelligent Technologies, formerly Liquid Telecom.
That dual government backing means that Chinese equipment vendors Huawei and ZTE will be excluded from supplying the Vodafone consortium. They are both suppliers to Ethio Telecom, the country’s monopoly provider until the new licensee starts operations, and the unsuccessful MTN bid was also Chinese-backed. MTN’s unsuccessful bid was in partnership with equity investors led by Silk Road Fund and ROHA Group.
That could be good news for European suppliers Ericsson and Nokia, and possibly for Japanese companies Fujitsu and NEC. Last week NEC announced an open radio access network (open RAN) partnership with Rakuten, which has launched cloud-based 4G and 5G services in Japan.
But the Vodafone partnership might also use Ethiopia to try out other open RAN suppliers. One of the main points of open RAN is that operators are not tied to particular vendors.
Abiy said at the weekend: “Our desire to take Ethiopia fully digital is on track. I would like to thank all that have taken part in this and for pulling off a very transparent and effective process!”
The Ministry of Finance said: “Ethiopia opens its telecoms market through a fair and transparent process. Thank you Global Partnership for Ethiopia for putting your best foot forward.”