Why Safaricom is Likely to Win Telecom Licenses Bid in Ethiopia?

The Ethiopia’s Communication Authority has finally invited bidders to send in expressions of interest as it move ahead with privatizing its telecom sector.

The Global accounting firm KPMG, on Thursday, presented its evaluation of the sector to Communication Authority while the regulator is expected to award two new licenses this year, ending the government’s monopoly in the telecom sector.

The license will allow the winners to build, own and operate a nationwide telecommunications networ in the Country.

At present, Kenya’s Safaricom has announced its intention to gain foothold in Africa’s second most populous country in the continent. France’s Orange, South Africa’s MTN and Zimbabwe’s Econet Global have also showed an interest to bid for the right to bid. It’s likely Safaricom may win going by its performance and innovation compared to its peers.

Ethiopia’s telecom sector liberalization strategy is expected to be a catalyst for boosting the Countries economic transformation in the East African fastest growing economy

Why SAFARICOM is Likely to Win?

Safaricom, the most profitable firm in the region, saw its net earnings for the year ended March 31 increase by 19.5 per cent to Ksh74.7 billion ($747 million) from Ksh62.49 billion ($624.9 million) buoyed by its mobile money transfer platform and increased usage of mobile data. Its stock on the NSE jumped 4.69 per cent to Ksh29 ($0.29) per share on April 29.

As this develops Ethio telecom the world’s largest telecom monopoly with 44 is also selling 40% of its stake to a strategic investor. Last year it vigorously modernized as the prospect of competition looms.

“The introduction of two new competitors and the partial privatization of Ethio Telecom in the next several months will significantly benefit the economy in general and telecom customers in particular,” said Zemedeneh Nigatu, an investment consultant.

A new draft licensing directive, set by Ethiopia’s government, will allow holders own and operate telecom network and provide service. Ethio Telecom, the country’s sole operator, is also expected to apply for a new license.

The regulator also warned, a license given to any telecom operator will be revoked if their services pose a threat to national security or public morality, according to the directive. Another draft directive, targeted at protecting consumers, also requires providers provide information about their services in language spoken by each regional state, in which official language is other than Amharic.

“This is a game changer for the economy. The amount of new and creative business that will be established at the back of the extended internet service will be significant,” said Addis Alemayehu, a communications expert and entrepreneur. “We can’t make all the youth into factory workers. They have to be allowed to create their own dream jobs.”

Ever since prime minister Abiy Ahmed took power in April 2018, his administration has taken a number of reform measures targeted at opening the economy to foreign investors including reforming the aviation sector and allowing its influential diaspora communities to invest in its financial sectors.