Safaricom plans joint bid with Vodacom for Ethiopia licence

Ethiopia plans to break the state monopoly by awarding two telecoms licences to multinational mobile companies by April 2020. April may be five months away but the scramble for the licenses have already begun as Kenya’s largest telecoms operator Safaricom plans a joint bid with South Africa’s Vodacom for one of two telecoms.

According to Reuters, Kenyan-American businessman and founding CEO of Safaricom Limited, Michael Joseph, said the company, partly owned by Vodacom and Britain’s Vodafone, had not made up its mind about another option of entering the lucrative Ethiopian market through partial privatisation of state monopoly Ethio Telecom.

The issuing of licences will end a state monopoly and open up one of the world’s last major closed telecoms markets in the country of around 100 million. However, the costs of acquiring the licences are nothing but cheap. “You have to bid for the spectrum. There is talk about it and it is in the billion-dollar range, just for the licence,” Joseph stated.

Ethiopian Communications Authority in its draft regulatory framework proposes to issue unified and class licenses for operators and service providers, respectively. The two new operators and Ethio telecom will be licensed for 15 years, and their license is subject to renewal, however, the operators are required to keep at least three years of data on their clients.

For the companies that will get unified licenses, they will engage with any telecommunications services including voice call, text, mobile data and wireless and fixed internet services as well as sending and receiving telecommunications to and from Ethiopia.

For the unified licence package, a full-service license will be accompanied by a spectrum license that assigns specific blocks of the radio spectrum. Meanwhile, the class service license holders are permitted to engage in infrastructure development such as towers and fibre optic installations but they will need to buy bundle packages from operators to sell to clients.

Unified, also known as full-service, licenses will be provided for the three telecom operators, including Ethio telecom and the two new operators that are expected to join the industry within six months.

South Africa’s MTN, France’s Orange and Etisalat of the United Arab Emirates are likely to be among the leading contenders vying for entry into the Ethiopian market.