Safaricom has been offered a path to enter the Ethiopian market
after Addis Ababa issued a timetable for the auction of two new telecoms
licences.
Ethiopia said last week that it plans to
award the permits by April next year and firms keen on bidding have
until November 22 to show interest, opening the country’s telecoms
market to foreign investment for the first time.
Safaricom
has expressed interest in either buying a stake in State-owned Ethio
Telecom, which is up for sale, or setting shop in the country from
scratch.
Michael Joseph, Safaricom's interim CEO, said
last week that the Nairobi bourse-listed telecom operator was consulting
on the bidding process even after earlier talking of plans to acquire a
stake in Ethio Telecom.
"We don’t know at this stage.
We will decide after the consultation period," Mr Joseph said in
reference to next month’s deadline.
Safaricom, like a number of global telecom firms including
Vodafone, MTN, Orange, Etisalat and Zain, have all expressed interest in
gaining access to Ethiopia’s fast-growing mobile market.
For
Safaricom, an acquisition would provide an easy solution compared to
setting up its own shop, which would involve buying land, putting up
buildings, hiring staff, recruiting subscribers and growing market share
against a dominant player like Ethio Telecom.
"The
Ethiopian Communications Authority (ECA) intends to issue two additional
licences for telecommunications services operators through a
competitive process pursuant to the Communications Services Proclamation
of Ethiopia," the regulator said in a statement.
Players
like Safaricom are attracted by the growth potential in the Ethiopian
market, whose 100 million population offers the country a penetration of
44 percent. Kenya’s 52.2 million mobile phone subscribers gives it a
penetration of 109.2 percent.
Mobile money platform
M-Pesa could transform Ethiopia’s economy, as it has done in Kenya, by
allowing people to sidestep a rickety and inefficient banking system and
send each other money and make payments at the touch of a button.
The
ability to access digital banking services is likely to be a
game-changer for Ethiopians whose banking sector has no way of
transfering funds from one bank to another.
Safaricom
joins a list of Kenyan firms that have had their eyes on Ethiopia for
years due to the country’s huge population. Ethiopia has kept foreign
involvement in the economy at a bare minimum.
The
country has consistently registered robust economic growth, averaging 10
percent in the past five years and its ongoing economic reforms look
set to strengthen investor sentiment.
Its population, which is the second largest in Africa after Nigeria, offers immense opportunities for business.
Addis
Ababa has plans of issuing the two new telecoms licences together with
the sale of Ethio Telecom as part of a "synchronised process."
It plans to announce both the share sale and the licensing process in March next year.
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