A license to operate telecommunication services in Ethiopia was on Saturday awarded to Kenya’s telco giant Safaricom in a consortium made up of Vodafone, Japan’s Sumitomo, and UK finance agency CDC Group.
The consortium, dubbed “Global Partnership for Ethiopia” paid $850 million for the license, beating South Africa’s MTN, which had also bid for a license with an offer of US$600 Million.
On Monday, the consortium welcomed the positive news adding that they will establish a new operating company in Ethiopia which aims to start providing telecommunications services from 2022. Safaricom will hold an estimated 56 percent in the company from the 51 percent announced previously.
Safaricom Shares Rally
Shares of Safaricom Plc rallied on Monday to hit a new all-time high of Ksh 43.45 and closed at Ksh 41.75 as investors reacted to the news of the Ethiopia license. Over the last one year, the counter has gained by more than 44%.
“We are excited for the opportunity to work with the people of Ethiopia to set up telecom networks to deliver a digital lifestyle. In past years, we have seen the power of digital transformation and its impact on our customers. We believe by working with all stakeholders in Ethiopia, we can deliver a similar transformation while achieving a sustainable return to our shareholders.”said Peter Ndegwa, the CEO of Safaricom.
Ethiopia is the second-largest country in Africa by population with more than 112 million people. The country is one of the last countries in the world to introduce competition in the telecom industry, a rigorous process started by the government in 2019 as part of its Economic Reform Agenda which aims to open up its vast and unexplored telecoms market, creating millions of online jobs, reduce poverty and grow the local economy.
The Consortium plans to invest up to US$8.5 billion in infrastructure among other areas and will create up to 1.5 million job opportunities.
According to Prime Minister Abiy Ahmed, the US $8 billion investment in the country’s telecom industry is considered the most significant foreign direct investment into Ethiopia to date.
“We want to make a real difference to the lives of Ethiopians through promoting widespread digital inclusion as part of Vodacom’s pledge to connect the next 100 million Africans by 2025.”Shameel Joosub, CEO, Vodacom Group.
According to Vodafone Group CEO Nick Read, the license approval is a significant development for Ethiopia, which is one of the last very large markets in the world to introduce telecom competition.