Safaricom-led consortium wins Ethiopian operating license

The Ethiopian telecommunications regulator awarded one operating license to a consortium led by Kenya’s Safaricom and Japan’s Sumitomo (8053.T), Brook Taye, a senior adviser at the finance ministry, said on Saturday.

The consortium, which includes Vodacom, Vodafone , and British development finance agency CDC Group, paid $850 million for the license, Brook said. South Africa’s MTN had also bid for a license.

Africa’s second-most populous country is hoping that the opening of one of the world’s last major closed telecoms markets will create millions of online job opportunities.

As as as the license fee, the consortium plans to invest up to $8.5 billion in infrastructure among other areas, Brook said, adding that it was expected to create between 1 and 1.5 million jobs.

The operator will begin with 4G services, Brook said. “We will soon open a bid for the remaining license,” said Balcha Reba, director general of the Ethiopian Communications Authority.

Balcha said MTN’s offer of $600 million was deemed too low.

Safaricom said in an earlier statement last month that “for structuring purposes, the respective consortium members may invest through special purpose investment vehicles”.

The bid winners will secure full operating licenses, but they will not be allowed to operate mobile phone-based financial services, government officials said last year.

They will also be required to set up their own network infrastructure, such as cellphone towers.

On April 27, Ethiopia’s finance ministry said it had received two bids from MTN and the consortium.

The announcement was the latest step in Ethiopia’s efforts to liberalise its economy: the country of 110 million people has one of the world’s last closed telecoms markets.

Vodafone, Vodacom, the United Kingdom’s CDC Group and Japan’s Sumitomo Corp are also part of the consortium, the finance ministry said in a post on Twitter announcing the two bids it had received.

The licences will pave the way to open up Ethiopia’s telecoms industry, which is considered the big prize in the country’s push to liberalise the economy.

The liberalisation will also involve the sale of a 45% stake in Ethio Telecom, which has said it also plans to launch mobile money transfer services.

“It seems companies like Orange and Etisalat are more interested in buying a stake in Ethio Telecoms,” Brook said, referring to the French and the United Arab Emirates mobile operators.