MTN, Vodafone bid for Ethiopia telecom licenses

Ethiopia's telecom market liberalization has been eagerly awaited for close to three years, and major players like MTN Group and a consortium involving Safaricom and Vodacom have submitted bids for telecommunications licenses. The Ethiopian government is set to review the technical offers this week. In an exclusive interview with CNBC Africa, Brook Taye, the Senior Adviser to the Minister of Finance for Ethiopia, shed light on the government's approach to the telecom sector reform and the role of new entrants in the market. One of the key considerations for the government in awarding telecom licenses is the size of the Ethiopian market. With a population of 110 million, Ethiopia represents a significant opportunity for telecom expansion. The government has initially planned to issue two licenses but decided to offer only one based on the financial offers received from operators like MTN Group and the Vodacom consortium. While the market could potentially absorb additional licenses, the government's decision-making is influenced by the nature of the offers presented. A critical issue in Ethiopia's telecom sector has been the absence of mobile financial services, which have proven to be lucrative in other African markets. Taye highlighted that the Ethiopian government has embarked on a comprehensive economic reform agenda, of which telecom liberalization is a part. The government's broader economic reforms include addressing macroeconomic, structural, and sectoral issues. Despite recognizing the potential of mobile financial services as a revenue stream in the future, the government emphasizes the need for a gradual approach to reform and ensuring a balanced transition that does not disrupt the existing financial sector dynamics. While international firms are currently restricted from participating in the mobile financial services segment, Ethiopia's domestic incumbent operator, Ethio Telecom, is poised to introduce its own mobile financial services soon. The delay in opening up this segment to foreign players is part of the government's cautious reform strategy, which aims to avoid abrupt disruptions in the market. Taye explained that the government is focused on maintaining a delicate balance between introducing reforms and safeguarding the stability of the financial sector. Addressing concerns about the pace of Ethiopia's economic liberalization, Taye emphasized that the government is not reacting to external pressures but is following its own homegrown economic agenda. The government has engaged with international financial institutions to seek support for its reform initiatives, including the telecom sector liberalization. Contrary to the perception of external demands dictating the pace of reforms, Taye underscored that Ethiopia is progressing at its own speed, mindful of nurturing a strong private sector as the foundation for sustainable economic growth. In conclusion, the Ethiopian government's approach to telecom sector liberalization is marked by a methodical and step-by-step strategy that prioritizes stability and sustainability. While global players like MTN Group and the Vodacom consortium are eager to enter the Ethiopian market, the government's emphasis on balanced reform and prudent decision-making underscores its commitment to fostering a conducive environment for investments and ensuring long-term economic prosperity.