The Ethiopian government sold only one of two full-service operator licences on offer in May, citing a lower-than-expected price for the second one. Now it’s trying again.
The Ethiopian Communications Agency (ECA), Ethiopia's telecommunications regulator, has again invited a request for proposals for the second licence, which is due to be issued in January next year. Proposals must be delivered by 20 December.
Despite references from the ECA to a “successful first licence issuance” and an “exciting opportunity”, there have been a few hiccups on the way, not least the rejection (as too low) of a bid from MTN after the original attempt to sell the second licence. MTN does not plan to resubmit a bid.
Importantly, the second licence didn’t originally include mobile financial services, which may have made it less attractive. This time round it will – and the consortium led by Safaricom that won the first licence will also be permitted to offer mobile financial services.
Both new entrants will face competition from state-owned incumbent Ethio Telecom, which has experienced no restrictions on rolling out mobile financial services and has now apparently attracted nearly 10 million customers to its Telebirr mobile money offering since its launch five months ago.
Expansion plans for the service are now being pursued; Ethio Telecom is apparently awaiting National Bank of Ethiopia (NBE) permission to begin an international remittance service shortly via Telebirr. The company also aims to engage in the provision of small loans.
As for the fate of the second licence on this occasion, Reuters suggests that Safaricom's winning bid of $850 million could serve as a guide for the price that will be paid.
The World Bank's private sector arm – the International Finance Corporation (IFC) – will serve as transaction adviser in the deal.