Consortium led by Safaricom wins Ethiopian operating licence

ETHIOPIA'S telecommunications regulator awarded one operating licence to a consortium led by Kenya's Safaricom Vodafone and Japan's Sumitomo, Brook Taye, a senior adviser at the finance ministry, said on Saturday.

The consortium, which includes Vodacom and British development finance agency CDC Group, paid US$850 million for the licence, he said.

South Africa's MTN had also bid for a licence.

Africa's second-most populous country is hoping that the opening of one of the world's last major closed telecoms markets will create millions of online job opportunities.

The awarding of the new licence marks the "beginning of a new era in our country", the Ethiopian Communications Authority said on Twitter.

As the consortium plans to invest up to US$8.5 billion in infrastructure among other areas, it was expected to create up to one and a half million jobs.

"With over US$8 billion total investment, this will be the single largest FDI (foreign direct investment) into Ethiopia to date," Prime Minister Abiy Ahmed said on Twitter.

The operator will begin with 4G services.

"We will soon open a bid for the remaining licence," said Balcha Reba, director-general of the Ethiopian Communications Authority. He said MTN's offer of US$600 million was deemed too low.

Safaricom in 2019 had estimated that it would have to pay about US$1 billion for a new licence.

Representatives from Vodacom and CDC Group declined to comment. Vodafone and Sumitomo Group could not immediately be reached for comment. Safaricom said that the company would issue a statement on Monday.

The Ethiopian government is also preparing to sell a 45 per cent stake in state-run mobile operator, Ethio Telecom. Earlier this month, the operator launched a mobile phone-based financial service.

For the moment, only Ethio Telecom will be able to offer mobile financial services as foreign operators are currently barred by law from participating. However, Prime Minister Abiy Ahmed said that mobile financial services would be opened up to competition after a year.