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Ethiopia to auction telecoms licenses in December, says Tigray conflict won't cause delays

11/20/2020 | 02:00am EST
FILE PHOTO: An Ethiopian Airlines plane prepares to takeoff next to an Ethio-Telecom network tower in Addis Ababa

* Expects to float bids for two licenses in two weeks

* Says no delay in the process due to Tigray conflict

* Sale of Ethio Telecoms stake to take nine months

NAIROBI, Nov 20 (Reuters) - Ethiopia expects to sell a minority stake in Ethio Telecoms within nine months and tendering for two new licenses will start on Dec. 1, an adviser to the state minister of finance said, brushing off concerns that conflict will delay the plan.

Africa's second most populous country considers the telecoms industry its crown jewel as Prime Minister Abiy Ahmed seeks to energize sclerotic state-run sectors of the economy with a raft of reforms.

The government says the opening of one of the world's last major closed telecoms markets will create millions of online job opportunities.

Industry executives said they thought a military offensive in the northern state of Tigray might distract officials and delay a long-awaited liberalization of the telecoms sector.

But the government does not expect a delay to the latest timetable "even by a single day," due to the military campaign launched on Nov. 4, Brook Taye, a senior adviser at the ministry of finance, told Reuters.

It has, however, missed several deadlines - the most recent one being April - for selling a stake in state-owned telecoms company Ethio Telecom.

Brook said the delay was because liberalizing the industry had required complex new laws.

Eyob Tekalign Tolina, state minister at the ministry of finance, did not return calls and messages seeking comment.

Balcha Reba, director-general of the Ethiopian Communications Authority, said the process would kick off soon.

"The authority does not expect any delays, and we expect the bid for two new licenses will be floated in a couple of weeks," Balcha told Reuters.

Telecoms executives in the region remain skeptical the latest timetable would be met.

"It is kind of inevitable that things may well slow down," said one executive on condition of anonymity, saying that senior government officials were likely to be in meetings on Tigray.

Ethiopia has predicted swift victory in the conflict as government forces advance on the Tigrayan capital, Mekelle, but rebel forces led by the Tigrayan People's Liberation Front (TPLF) are in control of Mekelle and major towns like Axum.

A second executive at a separate company, who also did not wish to be named, warned protracted conflict could reduce the amount investors are willing to pay for licenses.

Brook declined to say how much the government wants bidders to pay, but Kenya's top operator Safaricom, which expressed interest in a consortium with Vodafone and Vodacom estimated last year it would have to pay about $1 billion for a new license.

Other firms that expressed interest include South Africa's MTN, UAE's Etisalat, French operator Orange SA .

TENDER WILL TAKE MONTHS

The formal tendering process begins on Dec. 1, Brook said, adding that it will take three to four months for investors to submit bids.

"We want to do it correctly. We want to do it cautiously," he said.

On the partial privatization of Ethio Telecom, Brook said the company had completed internal re-organizations, which were a pre-requisite for the sale of the stake, paving the way for the next phase from this month.

"It will be a nine-month process," he said of the transaction, which is being led by Deloitte.

Investors have not yet been asked to submit interest in the Ethio Telecom stake but Brook said there was strong interest. (Editing by Katharine Houreld and Elaine Hardcastle)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
EMIRATES TELECOMMUNICATIONS GROUP COMPANY 14.92% 20.8 End-of-day quote.23.08%
ETIHAD ETISALAT COMPANY -0.85% 29.25 End-of-day quote.2.09%
MTN GROUP LIMITED -0.50% 63.49 End-of-day quote.5.48%
ORANGE 0.33% 9.698 Real-time Quote.-0.74%
SAFARICOM PLC 0.14% 36.4 End-of-day quote.6.28%
SAUDI TELECOM COMPANY -2.58% 113.2 End-of-day quote.6.79%
VODACOM GROUP LIMITED 0.17% 123.4 End-of-day quote.-0.80%
VODAFONE GROUP PLC 0.09% 127.16 Delayed Quote.5.01%
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