Safaricom-Ethiopia deal to generate $8.5 billion investment in 10 years

By Remie Otieno

A new telecommunications license awarded to Kenya’s mobile operator Safaricom by the Ethiopian government is set to generate in excess of $8.5 billion in investment in 10 years and is projected to create up to 1.5 million new jobs.

Safaricom-led consortium bid was confirmed on Saturday, in a deal that includes its parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan’s Sumitomo Corporation who won the award after submitting a financial bid of $850 million (Sh91.8 billion).

Last week Safaricom increased its chances of clinching the deal (ahead of a formal announcement by the Ethiopian government) after it raised its controlling stake in Global Partnership for Ethiopia to 56 percent from the 51 percent – a clear indication it was a ‘done deal.’

Safaricom had in April this year made a formal bid to get a license to operate in Ethiopia — which remains one of the world’s last major closed telecoms markets today.

The Ethiopian government is expected to assess the bids within a one-month window and announce the successful firms before the end of May. The request for proposal for the two new licenses was launched on November 27 last year and some 12 firms including Safaricom expressed interest.

The licenses will pave the way to open up Ethiopia’s telecoms industry, which is considered the big prize in the country’s push to liberalize its economy with over 100 million population. The liberalization will also involve the sale of a 45 per cent stake in Ethio Telecom, which has said it also plans to launch mobile money transfer services.

Besides Safaricom, Ethiopia received a license bid from a consortium including Vodafone Group, Vodacom Group as well as MTN Group, Africa’s largest wireless carrier, and China’s Silk Road Fund.