It has been confirmed that Safaricom has finally entered the Ethiopia market, following a report published by Bloomberg that the transaction has been approved for a consortium of partners named Global Partnership including Vodafone Group – the UK company that owns a 5 percent stake in Kenya’s leading telco.
Other partners in this transaction include Vodacom Group, Sumitomo Corporation and CDC Group.
Recently, it has been reported that Ethiopia was opening up the mobile money space for foreign companies. Earlier, Ethiopia had limited the bid for mobile money services to local companies.
Now, the development means that the telco space is now open for other companies, following years of bids, setbacks from regulatory adjustments, and the ongoing pandemic. However, the issuance of the telco license to the Consortium comes with another development: the sale of the second new permit has been halted because Ethiopia wants to revise its policies before any new bids can be made in the coming days.
The bid reportedly cost $850 million for the license.
Bloomberg adds that Vodafone, and by extension, Safaricom, will invest $8.5 billion in the market over a decade. The investments should also see 1.1 million new jobs for Ethiopians.
Moreover, the terms state that the company should deploy 4G network across the country by 2023. This is unlike, for example, the Kenya case where Safaricom’s LTE coverage is above 96 percent.
Besides the Vodafone bid, the government of Ethiopia had received permit requests from MTN and Silk Road Fund from China.
It would be fascinating to see how the permit will be put to work over the next couple of years. Also, the market is going to be exciting because it has more than 110 million people (more than double the population of Kenya) that are probably going to interested in value adds such as Safaricom’s M-PESA.
Quotes
We are excited for the opportunity to work with the people of Ethiopia to set up telecom networks to deliver a digital lifestyle. In past years, we have seen the power of digital transformation and its impact on our customers. We believe by working with all stakeholders in Ethiopia, we can deliver a similar transformation while achieving a sustainable return to our shareholders.
Peter Ndegwa, CEO of Safaricom
The consortium partners have a great track record for delivering transformative technology services, particularly when it comes to health, education and agriculture, built on quality telecom networks. We want to make a real difference to the lives of Ethiopians through promoting widespread digital inclusion as part of Vodacom’s pledge to connect the next 100 million Africans by 2025.
Shameel Joosub, CEO, Vodacom Group
This is a significant development for Ethiopia, which is one of the last very large markets in the world to introduce telecom competition. We want to play a transformational role in ensuring Ethiopia’s huge economic and developmental potential is realised through the deployment of next-generation connectivity and digital services, creating an inclusive and sustainable digital society.
Nick Read, CEO of Vodafone Group
Sumitomo Corporation operates a variety of businesses across the world, and the media and digital sector is one of the most important areas for us. We plan to bring our ample experience in Asia and Japan and know-how for cutting-edge digital transformation to a really emerging country, Ethiopia. We would like to realise a better life for the people of Ethiopia based on our corporate message, ‘Enriching lives and the world’, and contribute to the further development of Africa.
Toshikazu Nambu, Executive Vice President & Chief Digital Officer, Sumitomo Corporation
Modern, stable and flourishing economies are built on reliable affordable digital infrastructure, and access to global trade. We are ready to roll out a state-of-the-art network that will bring vital economic opportunities to tens of millions of Ethiopians, from urban dwellers to farmers, and to businesses large and small. This outcome has the power to unlock development over time and is great news for Ethiopians across the country.
Tenbite Ermias, CDC’s Head of Africa
This is misleading. Safcom has 56%of the consortium. In turn safcom is 40% owned by vodacom not Vodafone. Vodafone now has a minority interest in vodacom.
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