MTN misses out as Safaricom wins sole Ethiopian Telco licence
MTN misses out as Safaricom wins sole Ethiopian Telco licence
The Global Partnership for Ethiopia (GPE), led by Safaricom, has emerged as the sole winner of a telecommunications license in the country. Ethiopian Communications Authority (ECA) officials announced that the consortium will invest more than $8 billion in the country's telecom sector over the next decade.
Safaricom leads the consortium with a 56% stake, followed by Japan's Sumitomo (25%), CDC Group (10%), Vodacom (6%), Vodafone and the UK sovereign investment fund. Ethiopian Prime Minister Abiy Ahmed announced that the group won the new license after submitting a $850 million financial bid.
Safaricom, Kenya's largest telecommunications company, recently increased its controlling stake in the global partnership to 56 percent from 51 percent following its shortlisting alongside the MTN consortium for telecom licenses in Ethiopia. Orange, Etisalat, Telkom SA, and Liquid Telecom all withdrew from the bidding process.
Safaricom's entry into Ethiopia brings an end to the country's decade-long telecom monopoly.
Big win for Safaricom as it expands African footprint
Safaricom defeated MTN Group and the Chinese Silk Road Fund consortium in Ethiopia's year-long telecoms privatisation process.
Safaricom has thus expanded beyond the borders of Kenya into another Eastern African country, Ethiopia, which has the continent's second-largest population after Nigeria.
This is a significant victory for the Kenyan operator, particularly given Ethiopia's decision to allow the telco to begin deploying its mobile money service, M-Pesa, in May next year.
M-Pesa is without a doubt Safaricom's most lucrative revenue stream, accounting for 33% ($770 million) of the telco's service revenue in fiscal year 2020. Ethiopia has only about 1.2 million mobile money (M-Birr) subscribers. Ethio Telecom launched its TeleBirr mobile money service in May, creating ample opportunity for another player such as M-Pesa.
M-Pesa, which currently has over 40 million users, will soon launch in Ethiopia, bringing it to eight African countries, including Kenya, Ghana, Egypt, the Democratic Republic of Congo, Mozambique, Tanzania, and Lesotho.
In addition, Safaricom is the only operator on the continent, apart from MTN and Vodacom, to have launched 5G networks. As a result, it is well-positioned to roll out high-speed internet connectivity throughout Ethiopia.
MTN misses out
Perhaps unsurprisingly, two of Africa's largest telecom operators, MTN and Safaricom, were among the first to seek access to Ethiopia's closed telecoms sector.
MTN, on the other hand, has now missed out on what could have been a watershed moment for the company's dominance in Africa's telecom market.
Perhaps the sheer size of Ethiopia's potential mobile subscriber base prompted the telco giant to proceed with its deadline day bid.
While political unrest in Ethiopia's war-torn Tigray region continues to pose investment risks, the lifting of mobile money restrictions would have created a massive opportunity for MTN's MoMo service.
It is unclear why MTN was not selected, given the ECA's previous announcement that it would award two new licences to incoming operators.
In conclusion, Safaricom is now directly competing with Ethiopia's state-owned Ethio Telecom, and it will be interesting to see how this develops in the future. However, one thing is certain for the time being – Africa's final telecom monopoly has come to an end.
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