A Vodafone consortium has been awarded a new telecommunication license in Ethiopia for US$850 million while MTN’s attempt to get one for US$600 million failed.
The license given to the Vodafone consortium (Vodafone Group, Vodacom and Safaricom Kenya), has paved the way for a long-awaited opening of the Ethiopian telecom sector to outside investors.
Other license winners include CDC Group Plc and Sumitomo Corp.
Bloomberg quotes senior adviser to the Ethiopian Finance Ministry, Brooks Taye as saying the sale of the second license has been called off, but fresh bids will soon be invited from international wireless carriers after some policy adjustments.
Reports say Vodafone plans to invest $8.5 billion in their network during the coming 10 years, including the US$850 million license fee.
Together, the new license winners have committed to creating 1.1 million jobs in 10 years and cover the country with a 4G service by 2023.
“With over $8 billion total investment, this will be the single largest foreign direct investment into Ethiopia to date,” Ethiopian Prime Minister Abiy Ahmed said on Twitter.
Meanwhile, MTN Group in partnership with the Silk Road Fund, a Chinese state investment group, offered $600 million for the license but they did not succeed.
An MTN spokeswoman was quoted as saying that MTN was disappointed with the unsuccessful outcome, adding that “the bid was guided by strategic and capital allocation disciplines,” she said.
Ethiopia has a population of more than 110 million, the second-largest in Africa, yet less than half its people have mobile-phone subscriptions. But certain conditions of the auction weakened the proposition, namely the requirement to use state-owned telecom towers and an initial block on issuing mobile-money licenses.
Some investors may also have been put off by a recent civil war in the northern Tigray region, which has raised humanitarian concerns in the U.S. and the European Union, among others.