Safaricom has one foot in Ethiopia telecom market

It would be outrageous to suggest that Safaricom’s entry into Ethiopia’s telecoms market is inevitable, 30 days out from the announcement of successful bidders of only two available licenses.

By 10am EAT on Monday, April 26, Safaricom was among the two firms to have submitted bids. There are two upcoming telco licenses with the bids now being the subject of a comprehensive review by the Ethiopian Communications Authority (ECA).

The only other bid named in Monday’s ceremony was from South Africa’s MTN Group.

A statement put out by the ECA after close of bids was vague and did not clear up whether more entities had filed for the unprecedented licenses in a country that has time in memory locked out foreign participants to its key industries.

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In June, last year, a dozen companies expressed interest in taking up the pair of licenses, including some of the world’s leading operators: Gulf-based Etisalat, Saudi Telecom Company, Liquid Telecom and Axian.

According to reporting by the Financial Times, any of the firms to have previously expressed interest kept off the process as economic and insecurity concerns on Ethiopia unravelled.

With just two license applicants and two open licenses, the process preluding the final announcement of bidders could be as well be over before it starts.

It is highly likely that the two bids will sail through smoothly seeing Kenya’s giant telecom company, Safaricom, touch ground in its second market ever.

While the licenses on offer limits successful bidders to voice, data and SMS services only, the opportunity is still as lucrative with Ethiopia being among the few remaining frontiers for telecoms expansion in the world.

Safaricom’s bid for the telecom license has enjoined its parent firms – Vodacom (South Africa) and Vodafone (UK) alongside the CDC Group (UK) and Sumitomo Corporation of Japan.

However, it remains unclear on the form of operations Safaricom would take in Ethiopia should it be named a license holder later in May.

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It is likely that the consortium of five will form a new company with a different name to set up shop in the country.

Safaricom’s direct involvement in such operations cannot, however, be understated given its close proximity to the market and its great involvement in the bidding.

Previously, Safaricom has disclosed that its consortium partners alongside itself would take up debt to finance the expansion in Ethiopia.

There will be no surprises when Safaricom is named a winner of the bid, next month.

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