Two multinational mobile companies will obtain telecom licenses to operate in Ethiopia, a senior government official announced. This is the first detailed announcement of the government’s plans for opening one of the world’s last major closed telecom markets.
Moreover, the Ethiopian government will offer a minority stake in Ethio Telecom, the monopoly operator, and foreign firms will be invited to bid.
“We have announced the market structure as ‘two plus one’,” Eyob Tekalign Tolina, State Minister of Finance, told Reuters, referring to the two new licenses and a 49 percent stake in Ethio Telecom, the monopoly operator. Although Mr. Eyob did not provide a timeline for the bidding process, he had previously commented that the government hoped to open bidding in September.
Ethiopia’s telecoms industry is considered the big prize in a push to liberalize the country’s economy launched last year by Prime Minister Abiy Ahmed because of its huge protected market serving a population of over 100 million.
Abiy took office last year and announced a raft of major economic and political reforms. Of all the pledged steps to open up the economy to private investment, Abiy’s government is moving the fastest on the telecoms sector. Officials have told Reuters that this is because the government believes that the sector will spur growth in other parts of the economy.
Ethiopia is also one of the final frontiers globally for multinational telecom companies. They have been eagerly awaiting the government’s announcement on the market structure since parliament passed a bill last month outlining the scope of a regulator for the sector.
A senior executive at one of the companies interested in entering Ethiopia described the recently announced market structure “as expected and very sensible approach,” according to Reuters.
Vodafone, South African operator MTN, France’s Orange and Etisalat of the United Arab Emirates are likely to be among the leading contenders vying for entry into the Ethiopian market.
Ethiopia’s population is youthful and growing rapidly. The economy has averaged near-double-digit growth annually for more than a decade. Just a third of Ethiopians have mobile phones, according to a 2018 World Bank study.