Vodafone and China-backed MTN are only bidders for Ethiopia

US-backed Vodafone and China-backed MTN are only bidders for Ethiopia

26 April 2021 | Alan Burkitt-Gray

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Ethiopia received just two bids, from MTN working China’s Silk Road Fund and a US-backed and Vodafone-led consortium, for its two telecoms licences this morning.

The Ministry of Finance sealed its doors (pictured) when the 10:00 deadline for bids had expired, and said it would make a formal announcement after the technical and financial evaluation is completed.

MTN made it clear that it is backed by the Silk Road Fund, a Chinese state-owned investment fund designed to foster increased investment in countries along the country’s One Belt, One Road, economic development project.

The Vodafone 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.

The US and UK financial backing would almosts certainly preclude the possibility of Vodafone using Huawei or ZTE technology for its bid.

Shameel Joosub, CEO of Vodacom group, said today: “We are submitting a strong tender as the Global Partnership for Ethiopia consortium led by Safaricom. It is never an easy job to open up a country’s telecom market, yet the Ethiopian government has managed to move forward with a large number of the regulations required for the benefit of 110 million Ethiopians. The country’s authorities have also repeatedly committed to create and maintain a level playing field for all, giving us confidence that the next round of regulations will be tackled as soon as possible. Our Global Partnership for Ethiopia has a unique mix of experience and know how to help transform Ethiopia into a modern digital economy and to positively impact the lives of Ethiopians.”

Balcha Reba, director general of the Ethiopian Communications Authority (ECA) issued a carefully written statement avoiding the clear fact that there were only two bids, despite two extensions of the deadline from an original date of 10 December 2020 in a process that was already months or years behind schedule.

The ECA held a virtual meeting in November 2020 at which 120 stakeholders took part. This “was an extension of the several months-long consultations as well as the Authority’s continued effort to ensure the process is achieved in a fair and transparent manner”, said the ECA at the time.

Now the ECA is putting a brave face on it, saying: “We are delighted to have had interest from established telecoms operators around the world.”

The ECA acknowledged that interest “in this unprecedented opportunity” was from companies “including … Africa’s two telecoms giants, MTN, the largest telecoms operator on the continent, and the Vodafone/Vodacom consortium, including Kenya’s largest telecoms provider, Safaricom.” But it named no other operators. 

The Ministry of Finance also tweeted pictures of two executives, from MTN and the Vodafone group, signing documents in its headquarters, before adding a picture showing the doors sealed after the deadline passed.

The ministry said in the tweet accompanying the two pictures: “Delighted to have received the bids for the nationwide telecom service licenses from two giant telecom operators consortium of Safaricom (Kenya), Vodafone Group (UK), Vodacom Group (South Africa), CDC Group (UK), & Sumitomo Corporation (Japan) #MTN Group Limited.”

In February Vodafone told Capacity its Kenyan subsidiary Safaricom “will be the lead partner” in a bid for Ethiopia, working with its main shareholder, Vodacom of South Africa. Vodafone is the main shareholder in Vodacom. Vodafone told Capacity that technological support will come from Sumitomo, the Japanese company that has been working in Myanmar with KDDI and state-owned operator MPT.

Vodafone said this morning that it was checking the wording of the Ministry of Finance’s statement, to clarify whether there were just the two bidders.

MTN said in a statement this morning: “MTN Group confirms that it is participating with equity partners in a bid for a telecoms licence in Ethiopia, Africa’s second most-populous country which represents the last and largest telco liberalisation opportunity in the world.”

The group added: “Our participation is aligned with our strategy, Ambition 2025, focusing on capturing growth from digital acceleration across the continent. It has been made in partnership with Silk Road Fund from China. Other partners will be disclosed on a successful bid outcome.”

Ralph Mupita, president and CEO of MTN group, said: “Ethiopia provides the largest telecommunication and digital services growth opportunity in Africa over the medium term and fits into our pan-Africa focus and platform strategy. We are being guided by our capital allocation framework in our assessment of this opportunity.”

Orange is known to be interested in the Ethiopian market. However the government of Ethiopia has said it wants to sell shares in the current monopoly provider, Ethio Telecom, and is likely to bid for a stake. Orange in the past had a management contract with Ethio Telecom.