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Wednesday, Dec 11th

Vodacom, Safaricom plan joint bid to enter Ethiopia

Vodacom, Safaricom plan joint bid to enter Ethiopia

Kenya telco needs US$2-bn to launch into the East African country, according to MD Michael Joseph.

Safaricom will need US$2-billion to launch a telecoms network in Ethiopia, according to the company's managing director Michael Joseph. It has also detailed plans towards a joint bid with Vodacom to engage the market.

At a recent presentation of the operator's financial performance for the six months ended 30 September 2019, Joseph said Ethiopia has a market entry fee capped at US$1-billion and the company will require a further US$1-billion investment in project infrastructure.

Although not the preferred option, Safaricom has not ruled out the option to acquire existing operators, notably the planned privatisation of national telecommunications company Ethio Telecom.

Safaricom is among several operators which have continued to express interest in Ethiopia, an attractive market given that of its 108 million people, only 41% are mobile subscribers.

Companies like MTN, Vodacom and Orange are understood to have been interested.

Ethiopia is expected to invite bids for two new telecoms licenses in November 2019. Winners of the bid will compete with the only player in the market enjoying monopoly, Ethio Telecom, which is also identified for part-privatisation in early 2020.

To strengthen its position, Safaricom is planning a joint bid with Vodacom.

"Ethiopia is the biggest prize left in Africa from a telecoms point of view (and) there's not many corporations that can do this on their own," said Joseph.

Balcha Reba, director general at the Ethiopian Communications Authority, said government's intention to open up the telecommunications industry would increase levels of competition.

The new licenses are expected to be issued in March 2020 at the time Ethio Telecoms will be divided into two – a separation of its services and retail from its mobile and fixed network infrastructure assets.

Safaricom's earnings increased, bolstered by M-Pesa's strong performance.

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