Will MTN try a second time for an Ethiopian licence?

Will MTN try a second time for an Ethiopian licence?

Pan-African operator MTN may have a second look at bidding for a mobile operator license in Ethiopia, despite being taken out of contention for apparently underbidding first time round, according to comments made recently by its chief executive.

Last week Ethiopia’s communications regulator awarded a Safaricom and Vodafone-led consortium with a licence to operate telecom services in Ethiopia, Africa’s second-most populous country. We reported recently on the somewhat complex vehicle through which these services will be offered.

The consortium is reported to have bid $850 million, while MTN, whose bid was in partnership with the Silk Road Fund from China, bid only $600 million. The MTN bid was not seen as high enough by the Ethiopian regulator.

However, a number of observers had pointed out that the bids were unlikely to be as high as  regulator may have hoped, after the option to run a mobile money service was solely offered to the incumbent Ethio Telecom.

Nevertheless, MTN chief executive Ralph Mupita told shareholders during the company’s (virtual) 26th annual general meeting last week that MTN would give some thought to the opportunity if the Ethiopian government chose to reissue the licence.

Mupita said that while MTN was saddened at not being named winning bidder, the group remained comfortable with its bid. Quoted in a number of African press reports, Mupita is said to have highlighted the licence conditions, saying, “We were particularly focused on the lack of mobile money in the licence regime, and there were some issues around how the teleco constructs would be accommodated within Ethiopia. We certainly priced for those things and near-term risks that we saw, and we felt that the financial bid there was appropriate.”

Certainly, for a company with a strong mobile money arm, the limitations of the licence may have been a consideration. The question still remains whether the regulator’s restrictions made it too difficult for MTN to make a higher bid – and indeed for other would-be players to see a profitable way to enter the market.