Safaricom’s entry into Ethiopia has been confirmed after the Ethiopian government awarded an operating license to the consortium it was leading.
Safaricom has been awarded a telecommunications licence to operate in Ethiopia, one of the world’s last major closed telecoms markets, the Ethiopian government announced on Saturday.
The telco beat other consortia in the last stretch of a year-long race for access to one of the world’s last telecoms frontiers.
Ethiopian Prime Minister Abiy Ahmed said the Safaricom-led consortium that includes its parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan’s Sumitomo Corporation won the award after submitting a financial bid of $8 billion (Sh864 billion).
“The Council of Ministers has unanimously made a historic decision today allowing Ethiopian Communications Authority to grant a new nationwide telecom licence to the Global Partnership for Ethiopia, which offered the highest licensing fee and a very solid investment case,” Prime Minister Abiy Ahmed said through his Twitter handle on Saturday.
“With over $8 billion [in the] total investment, this will be the single largest FDI [foreign direct investment] into Ethiopia to date.”
The Prime Minister said the process was competitive and above board.
“Our desire to take Ethiopia fully digital is on track. I would like to thank all who have taken part in this for pulling off a very transparent and effective process,” he said.
Welcoming foreign investment
Last November, the Ethiopian Communications Authority had listed 12 firms including Safaricom as among firms that had expressed interest in entering the country’s telecommunications market.
Ethiopia’s nascent telecommunications sector is considered one of the most lucrative as the once inward-looking country opens up to foreign investment for the first time.
Players like Safaricom are attracted by the growth potential in the Ethiopian market, whose population of over 110 million offers a penetration rate of 44 per cent.
The Safaricom consortium will likely rely on funding from deep-pocketed foreign investors such as the US International Development Finance Corporation (DFC) and CDC, given the size and international nature of the Ethiopia investment.
South Africa’s Vodacom and United Kingdom’s Vodafone own a combined 40 per cent stake in Safaricom.
Earlier this month, Ethiopia made a U-turn and allowed foreign telecommunications companies to launch mobile phone-based financial services, setting the stage for Safaricom to introduce its popular M-Pesa to the market.
PM Abiy said then that mobile financial services in the country would be opened to competition from next May, with foreign firms free to battle it out with State-run Ethio Telecom.
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