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Ethiopia is moving ahead with its first-ever bids for telecoms licenses

REUTERS/Tiksa Negeri
An Ethio Telecom branch in Addis Ababa

Ethiopia’s Communication Authority has invited bidders to send in expressions of interest as it looks to move ahead with privatizing its telecom sector, after delays due to the global coronavirus pandemic.

Global accounting firm KPMG, on Thursday, presented its evaluation of the sector while the regulator is expected to award two new licenses this year, ending the government’s monopoly in the telecom sector.

The license will allow the winners to build, own and operate a nationwide telecommunications network, including an international gateway.

So far, Kenya’s Safaricom has announced its intention to gain foothold in Africa’s second most populous country in the continent. France’s Orange, South Africa’s MTN and Zimbabwe’s Econet Global have also showed an interest to bid for the right to bid.

Ethiopia’s telecom sector liberalization strategy is expected to be a catalyst for boosting the economy’s transformation in the East African country, which was once one of the world’s fastest-growing economies but has cooled off over the last three years and is taking a significant hit during the Covid-19 pandemic.

Ethio telecom is often noted as the world’s largest telecom monopoly with 44 million subscribers, while its internet users are above 22 million. Over the last year it has attempted to modernize as the prospect of competition looms.

“The introduction of two new competitors and the partial privatization of Ethio Telecom in the next several months will significantly benefit the economy in general and telecom customers in particular,” said Zemedeneh Nigatu, an investment consultant.

A new draft licensing directive, set by Ethiopia’s government, will allow holders own and operate telecom network and provide service. Ethio Telecom, the country’s sole operator, is also expected to apply for a new license.

The regulator also warned, a license given to any telecom operator will be revoked if their services pose a threat to national security or public morality, according to the directive. Another draft directive, targeted at protecting consumers, also requires providers provide information about their services in language spoken by each regional state, in which official language is other than Amharic.

“This is a game changer for the economy. The amount of new and creative business that will be established at the back of the extended internet service will be significant,” said Addis Alemayehu, a communications expert and entrepreneur. “We can’t make all the youth into factory workers. They have to be allowed to create their own dream jobs.”

Ever since prime minister Abiy Ahmed took power in April 2018, his administration has taken a number of reform measures targeted at opening the economy to foreign investors including reforming the aviation sector and allowing its influential diaspora communities to invest in its financial sectors.

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