Ethiopia has raised $ 850 million from historic telecommunications auctions

Ethiopia has granted its first $ 850 million telecommunications license to the UK’s Vodafone consortium, which could mark the start of an opening for Ethiopia’s closed economy.

Kenya’s Safaricom consortium led by Vodafone and Vodacom also includes the British financial development agency CDC and the Japanese Sumitomo. South Africa’s MTN is offering too low a $ 600 million second license offer and will not return the license again.

The Ethiopian government billed the Ethiopian government for opening up to a rapidly growing country with a global telecommunications monopoly of 114 million people. “Century Treatment”.

But restrictions on the provision of mobile bidding services to potential bidders and the government insisted that new operators build their infrastructure or rent Ethio Telecom, the state’s monopoly, instead of using third-party tower operators.

Some bidders also thought they were careful unstable political situation last November when the federal army went to overthrow the Tigray regional government.

Companies that showed initial interest, including Orange in France and Etisalat in the United Arab Emirates, are expected to take a second look when the license is revoked, according to telecommunications analysts.

Since the initial offer closed, the government has softened its stance on mobile money, saying new entrants will be able to offer these services within a year, subject to central bank approval.

Prime Minister Abiy Ahmed said in a tweet on Saturday that the consortium led by Safaricom is the largest foreign direct investment in the country’s history. Ethiopia has nearly doubled in the last two years based on an Asian-inspired development model over the past 20 years, as foreign capital has prevented it from controlling the “high authority” of the economy, such as banking and telecommunications.

Abiy said the new consortium will invest more than $ 8 billion building a network over the next decade.

Brook Taye, chief adviser to the Finance Ministry and a member of the team overseeing privatization, said the successful consortium is committed to launching a low-orbit satellite to cover the entire country by 2023. The new investment would generate between 1.1 and 1.5. m jobs, he said.

One person familiar with the bidding process said the investment and number of jobs were wonderful, driven by a desire to present good news ahead of next month’s scheduled national elections. “There’s never going to be money on the ground if you invest $ 8 billion to make money,” the person said. “I think the numbers are coming out of the air.”

Safaricom employs about 5,500 people in Kenya, a country with an economy similar in size to Ethiopia, about $ 95 billion, and a population of 52 million, just under half its size.

However, Safaricom’s sustainability report said its services support employment for more than a million people through its “broader economic impact,” considering that entrepreneurs are able to make a living from the telecommunications ecosystem.

Brook said the second license will be revived “very soon” to make it more attractive with more adaptations to the rules. Those who could have been bidders in the first round complained about the changing rules, including a lack of clarity on interconnection rates, which were cut short before bids were made.

Brook denied that the tender was opaque, saying it was “the most transparent process that has ever happened in Ethiopia.” He said the sector will be more open “so we think the second offer will be very successful”.

Ethiopia also plans to sell a 40 percent stake in Ethio Telecom, which has 46 million subscribers by the end of this year.