TechInAfrica – A joint bid worth approximately USD 1 billion (R15 billion) for an Ethiopian telecommunications license is in talks between Safaricom and parent Vodacom Group. The Horn of Africa is expected to invite bids for two new licenses this month to compete with its monopoly Ethiopian Telecommunications Corp, which is also slated for part-privatization in early 2020.
As Safaricom CEO Michael Joseph noted on a Friday interview, the bid for Ethiopian is predicted to be on the higher spectrum. “Then you have to spend another $1 billion on the network. There’s not many corporations that can do this on their own,” he added.
The two companies are eyeing one of the two permits of a consortium with the two financial institutions, according to Joseph, and that Safaricom is more keen on a greenfield operation when considering the possibility of participating in Ethio Telecom’s privatization.
Tracy Kivunyu, a senior telecommunications analyst at Tellimer, mentioned Ethiopia’s means of finding the opportunity for monetization of its spectrum. “So there could be a lot of premium pricing to get into the market, that’s something to consider versus the cost of investing in the network,” she added.
With more than 108 million people and an estimated 50 million phone subscribers, Joseph saw Ethiopia as “the biggest prize left in Africa from a telecoms point of view”. But it has to deal with the challenge of foreign exchange controls, a budding democracy, and yet-to-be-published industry regulations. Other international carriers like Orange and MTN Group also nurture interest in expanding their reach to the nation that’s filled with relatively low-level of data penetration and internet access.
Ethio Telecom’s sales came in at $340.2-million in the July-September quarter, 21% more than a year earlier, while Safaricom, whose first-half net income climbed 14% to 35.7 billion shillings after booking of 129.9 billion shillings of revenue, ($345.7 million), paid $55 million for an initial 15 year Kenyan operating license back in 1999.
Since telecoms licenses prohibit mobile money services, the company would be likely to collaborate with a local financial institution, said Lisa Kimathi, a senior research analyst at Standard Investment Bank. – Reported by Bella Genga, (c) 2019 Bloomberg LP
Source: Techcentral.co.za, Bloomberg