A Vodafone consortium was awarded a new telecommunications license in Ethiopia for US$850 million, while MTN’s bid for US$600 million was unsuccessful.
The Vodafone consortium (Vodafone Group, Vodacom, and Safaricom Kenya) has been granted a license, paving the way for the long-awaited opening of the Ethiopian telecom sector to outside investors.CDC Group Plc and Sumitomo Corp. are two other license winners.
According to Bloomberg, Brooks Taye, senior adviser to the Ethiopian Finance Ministry, the sale of the second license has been cancelled, but new bids from international wireless carriers will be solicited soon after some policy changes.
According to reports, Vodafone plans to invest $8.5 billion in their network over the next ten years, including the US$850 million license fee.
The new license winners have agreed to create 1.1 million jobs over the next ten years and to provide 4G service throughout the country by 2023.
“With a total investment of more than $8 billion, this will be the single largest foreign direct investment into Ethiopia to date,” Ethiopian Prime Minister Abiy Ahmed tweeted.
MTN (Mobile Telecommunications Network)
Meanwhile, MTN Group offered $600 million for the license in collaboration with the Silk Road Fund, a Chinese state investment group, but they were unsuccessful.
An MTN spokeswoman was quoted as saying that the company was disappointed with the outcome, but that “the bid was guided by strategic and capital allocation disciplines.”
Ethiopia has more than 110 million people, the second-largest in Africa, but less than half of them have mobile phone subscriptions. However, certain auction conditions, such as the requirement to use state-owned telecom towers and an initial ban on issuing mobile-money licenses, weakened the proposition.
Some investors may have been put off by the recent civil war in northern Tigray, which has raised humanitarian concerns in the United States and the European Union, among others.