Ethiopia’s revived plan to sell a second telecommunications licence to international operators received an early setback as MTN Group isn’t likely to resubmit a bid, according to people familiar with the matter.
MTN Group offered US$600-million to enter Africa’s second most populous country earlier this year, only to be rejected by the Ethiopian government. And while the state has since adjusted the terms of the auction in pursuit of attracting a higher amount, MTN sees the investment risk starting to outweigh the benefits, said the people, who asked to remain anonymous as the deliberations are not public.
MTN declined to comment. Eyob Tekalign, Ethiopia’s state minister for finance, did not immediately respond to a phone call and text message seeking comment.
Ethiopia awarded one licence to a consortium led by Vodacom Group unit Safaricom in May, after accepting an offer of about $850-million and a commitment to invest 10 times that amount over the next decade. The government has also put a minority stake in state firm Ethio Telecom up for sale alongside sugar assets, part of a privatisation plan to raise funds for debt repayments and to boost the economy.
Yet for MTN at least, developments such as Ethiopia’s ongoing civil war in the northern Tigray region have made entering the country less attractive than in the past, said the people. Tensions around the filling of a giant dam on the Nile are also a concern, they said, due to the increased threat of conflict with downstream nations Egypt and Sudan.
Operating in times of unrest carries the risk of telecom infrastructure being damaged, said the people, and Ethiopia will need about 7 500 to 8 000 new mobile towers to expand services around the country. Less than half of nation’s 110 million people have mobile phone subscriptions, though improving services and adding customers will require significant investment.
MTN hasn’t finalised its plans, said the people, and are still examining the situation. There’s also the possibility that another company will see a bid as more viable, especially as Ethiopia is now including the opportunity to offer mobile financial services from the outset.
“The Ethiopian Communications Authority wishes to inform all interested telecoms operators to consider this attractive multinational investment opportunity and to remain tuned for additional information by the authority on the launch date of the bid process,” the regulator said in a statement.
The Horn of Africa country is in the process of selling a 40% stake in Ethio Telecom. France’s Orange has shown an interest, having previously held a management contract with the firm in the early part of last decade. — (c) 2021 Bloomberg LP