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Ethiopia Licence Deal Without M-Pesa Could Hurt Profitability – Safaricom

Ethio Telecom [Photo/Courtesy]

The Ethiopian Communications Authority has completed evaluation of the expressions of interest submitted by 12 interested countries in June this year. The Ethiopian government is expected to make a call for proposals from the qualifying firms by end of November.

Ethiopia invited foreign telecom companies as part of its homegrown economic reform agenda launched in 2019. The companies have been invited to buy a 40 per cent stake in Ethio Telecom, in efforts to end monopoly in the sector and liberalize the country’s economy.

The Ethiopian Communications Authority is set to award the two winning firms a full telecommunication licence to operate in the country.

Read: Ethiopia Suspends Entry Of Foreign Telcos In Privatization Plans

The Ethiopian government in August suspended bids by international companies and infrastructure providers.

“The government has decided not to allow foreign telecom infrastructure companies. They will not be allowed to operate here,” Frehiwot Tamiru, Ethio Telecom chief executive, said in August.

These cut short its list which now accommodates local mobile operators. The Ethiopian government also said that only the locally owned non-financial services will be allowed to offer mobile money services in the country.

Read: Ethiopia Suffers Sh10 Billion Loss Following Internet Shut Down

This means that even if Safaricom wins the licence, they would not be able to roll out M-pesa, one of its biggest products in the Kenyan market.

Safaricom CEO Peter Ndegwa revealed that a deal without M-pesa would hurt the Telcos profitability and take them much longer to recover their investment.

“A license that doesn’t include a mobile money license will significantly reduce the level of profitability and therefore in essence, our bid price for the license but also our profitability and payback period,” chief executive Peter Ndegwa said.

Read also: Government of Kenya Lied About My Stay In Ethiopia – Journalist Yassin Juma

Safaricom has expressed its interest through a consortium with Vodacom and Vodafone, and is hopeful that it will be among the shortlisted candidates who will be requested to submit their proposal.

“We are ready to go and we are waiting for the request for proposal.,” Safaricom chairman Michael Joseph said.

He said they were ready to abide by the conditions set by the Ethiopian government. Ethiopia has a population of about 110 million people with 50 million mobile phone subscribers, making it a vast potential market for mobile services.

Read also: Give Africa Ksh15 Trillion To Fight Covid-19 – Ethiopia Tells Developed Countries, World Bank

Ethiopia’s telecom sector transformation comprises of Ethio Telecom, the sole supplier of telecom services in the country and Ethiopian Communication Authority (ECA) which is in charge of licensing for the two companies that will be successful in entering in the country.

The other 11 firms that have expressed interest are: Etisalat, Axian, MTN, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile and the two non-telecom operators, Kandu Global Telecommunications and Electromecha International Projects.

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Written by Vanessa Murrey

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