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Home Mobile Safaricom Awarded Ethiopia’s Telecommunications Operating License

Safaricom Awarded Ethiopia’s Telecommunications Operating License

by Milcah Lukhanyu
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Safaricom-led consortium has acquired Ethiopian operating license after successful biding. The consortium which includes Vodacom, Vodafone and British development finance agency CDC Group and Japans Sumitomo Corporation offered $850 for the license.

The Ethiopian Prime Minister Abiy Ahmed confirmed that Safaricom led consortium won the award after offering a financial bid of $850 million.

He made a statement on his Twitter account, that the council of ministers unanimously made a historic decision allowing all 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.

South Africa’s MTN which also bid for the license lost as they had offered a lower bid of $600 million.

The consortium plans to invest over$ 8.5 billion in infrastructure over a decade and create up to 1.5 million jobs.

The Prime Minister said that this will be a single largest Foreign Direct Investment in to Ethiopia to date. That their desire to take Ethiopia fully digital is on track. He thanked all that have taken part in this and for pulling off a very transparent and effective process.

The Ethiopian Government had ealier planned to give two telecom licenses but in April, it announced it had received only two bids after some firms that had earlier expressed interest opted out, including Orange form France and Etisalat from UAE.

The Director General of Ethiopia Communication Authority, Belcha Reba, said that the second license will be re-tendered.

Brook Taye,a senior advisor at the finance ministry, said the Safaricom led Consortium will offer 4G and 5G network services and that by 2023 a low orbit satellite will be put across the nation. to provide 4G coverage

Ethiopia is Africa’s second most populous country with 110 million people. It is  considered one of the last countries to have retained a state- owned monopoly provider of  telecom network and services, a market which is dominated by private sector in most countries.

 The move to open the market to private sector competition, and foreign investment, is therefore expected to bring lower prices, higher quality of service and more choice for consumers. It will also lay the foundations for Ethiopia’s future digital transformation.

Safaricom consortium will most likely rely on funding from foreign investors for instance, CDC and US International Development Finance Corporation following the size and international status of the Ethiopia investment.

Ethiopia recently allowed foreign telecommunication companies to offer mobile phone financial services, a move that will pave way for Safaricom to introduce Mpesa services to the populous nation. The introduction of digital banking services will transform Ethiopia banking sector which has no way of transferring funds from one bank to another. Ethiopia’s mobile phone services seeks to attract 21 million customers for the service in its first year and 33 million in a span of 5 years.

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