Ethiopia to get a new Mobile Network Operator that will provide 4G & 5G

Ethiopia has been talking for a long time about getting a new MNO. Finally, they may have one.

Bloomberg reported:

Ethiopia awarded a new telecommunication license to a consortium including the U.K.’s Vodafone Group Plc, paving the way for a long-awaited opening of the sector to outside investors.

The government of the Horn of Africa country had received two offers. The consortium led by Safaricom submitted a bid of $850 million, according to the prime minister. The other from MTN Group Ltd., Vodacom’s Johannesburg rival, and partners including the Silk Road Fund, a Chinese state investment group, was for $600 million.

The winners -- Vodafone, Vodacom Group Ltd., in which the British carrier has a majority stake, and Nairobi-based Safaricom Ltd. -- will invest $8.5 billion in their network during the coming 10 years, including the license fee. Others include CDC Group Plc and Sumitomo Corp.

The government of the Horn of Africa country had received two offers. The consortium led by Safaricom submitted a bid of $850 million, according to the prime minister. The other from MTN Group Ltd., Vodacom’s Johannesburg rival, and partners including the Silk Road Fund, a Chinese state investment group, was for $600 million.

A momentous day for #Ethiopia! Imagine the quality service and efficiency it will engender, the new opportunities, millions of jobs and the transformative effect to our economy! 🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹🇪🇹 https://t.co/CCHeZq1OWF

— ብሩክ ታዬ Brook Taye (@btaye) May 22, 2021

Al Jazeera added:

The Safaricom-led consortium will provide 4G and 5G internet services, and by 2023 a low-orbit satellite will be put in place to provide nationwide 4G coverage, Brook said.

“A momentous day for Ethiopia!” he wrote on Twitter.

“Imagine the quality service and efficiency it will engender, the new opportunities, millions of jobs and the transformative effect to our economy!”

Ethiopia’s telecoms reforms also include a plan to sell a stake in Ethio Telecom, a move officials hope will make the firm more efficient.

It should be noted that last year, Vodafone group invested in AST & Science's SpaceMobile to Beam 4G / 5G Directly to Devices. Nick Read, CEO, Vodafone Group, said: “At Vodafone we want to ensure everyone benefits from a digital society – that no-one is left behind. We believe SpaceMobile is uniquely placed to provide universal mobile coverage, further enhancing our leading network across Europe and Africa - especially in rural areas and during a natural or humanitarian disaster - for customers on their existing smartphones.”

There is very little information on Global Partnership for Ethiopia available at the moment. This Wikipedia article has some details that will hopefully be expanded later on.

Related Posts:

• Connectivity Technology Blog: AST & Science's SpaceMobile to Beam 4G / 5G Directly to Devices
• Operator Watch Blog: Ethiopia Ready to Break Telecom Monopoly
• Operator Watch Blog: Eritrea, the last country in the world to adopt a mobile phone system 

Ethiopia Ready to Break Telecom Monopoly

Ethiopia was one of the last countries in Africa to allow its national operator a monopoly on all telecom services including fixed, mobile, internet and data communications.

The only operator present in Ethiopia is Ethio Telecom, or  Ethiopian Telecommunications Corporation (ETC) and owned by the government. It's the only telecommunications services provider in Ethiopia, providing internet and telephone services on landlines and mobiles. It was managed 2010-12 by France Telecom, but is now back under the full control of the government.

Until now Ethio Telecom’s monopolistic control has stifled innovation, restricted network expansion and limited the scope of services offered. However, in June 2019 the government approved legislation which will open the market to competition and provide much needed foreign investment. There has also been considerable investment in telecoms services, infrastructure and service expansion projects in recent years. Ethio Telecom has secured a network monitoring platform to help it improve services and has also revised plans to launch a telecom satellite, while the government initiated the construction of a $3 billion technology city.

Most of the technologies deployed thus far have been provided by ZTE and Huawei, which have often been preferred for offering vendor financing. In preparation for competition in the mobile market, Ethio Telecom has placed the expansion of LTE services as a cornerstone of its investment program to 2022.

Penetration of mobile phones is low in the country: only about 4.5% of Ethiopian population own one. The mobile service is unreliable and often interrupted. The system is frequently out of work or overloaded, callers using both the landlines and mobile network are unable to connect, the situation is made worse by inclement weather. Frequent power outages and damages to fibre optic cables add to the problems.

Coverage is very low outside the capital and provincial towns. 3G services started in 2008 only in major towns so far. In 2015: 95% of the population were in a 5 km radius to the next available phone line (being either a landline or within mobile coverage). Nevertheless, the maximum distance that people from rural communities have to travel for being able to use telecom services decreased from 30 km to 5 km within the last 10 years. This is in contrast to 725 base stations built in the capital Addis Abeba alone.



Ethio Telecom operates 3G up to HSPA+ is on 2100 MHz. 4G/LTE this was launched in Addis Abeba only in 2015 on 1800 MHz (B3). 4G/LTE is available for prepaid in the capital. Ethio also operates a network in CDMA/EVDO technology, that is not compatible with GSM technology.

The monopoly of Ethio Telecom will however come to an end soon. In 2019 Ethiopia awarded two telecoms licenses to multinational mobile companies. The government also offered a minority stake in Ethio Telecom. The privatization drive amounts to 40% of the country's telecom sector.  The government expected the winning companies to start operations in 2020, initially using Ethio Telecom’s infrastructure to run their networks while building up own infrastructure.

However as of last month 12 foreign companies have submitted bids for a partial stake in Ethiopia's telecommunications monopoly. In a press release, the Ethiopian Telecommunications Authority (ECA) said it has received complete information and expression of interest from nine international telecom operators and two non-telecom companies.

According to the ECA, the bidders from the telecom sector are Etisalat, Axian, MTN, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, and Global Partnership for Ethiopia, a consortium of telecom operators comprising Vodafone, Vodacom, and Safaricom. The two non-telecom companies are Kandu Global Telecommunications and Electromecha International Projects.
It is not yet clear when the winners will be announced.

GSMA Intelligence estimated Ethio Telecom had 43 million connections (excluding IoT) at end Q2 2019. Of these, 96 per cent were prepaid with less than 9 per cent on 4G.. GSMA Intelligence estimated the number of unique mobile subscribers was 35.4 million at the end of Q3 2019, with just 20.7 million of these data connections.

Ethiopia: Finally opening up

Ethiopia’s state owned telecommunications company, Ethio Telecom is currently Africa's largest mobile operator.

According to IT Web’s report with over 57 million mobile subscribers as at November 2017, Ethio Telecom had beat MTN Nigeria to become Africa’s largest in terms of its mobile customer base.

A sector expert was quoted to have said:

“Ethio Telecom of Ethiopia is now the largest mobile operator in Africa in terms of subscriptions, with 57.34 million mobile subscriptions at end-2Q17. Ethiopia is also one of the very few African countries that has not liberalised its telecoms market and introduced competition, so Ethio Telecom has a monopoly,” 

An expansion drive costing over $1.6 billion in the last few years has contributed greatly to this success. According to a statement on their website: 

"The expansion project has also significantly improved quality of services, with customers enjoying 3G wireless services by upgrading the 2G network across all regions covering all over the country; with also 4G LTE, super-fast services, launched in Addis Ababa. Over the past few years, Ethio Telecom has been transforming itself to meet its vision of becoming a world class operator and our journey so far shows we are on the right track.”

The company reports that 64.4 million of its customers are mobile phone subscribers, and 1.2 million are fixed line users. The company's internet service users have also reached 16 million. Ethiopia is Africa’s second most populous nation behind Nigeria and the numbers are believed to have played a significant part.

The other reason for this success is the strictly regulated economy of Ethiopia and the government til date has not liberalized the telecoms sector resulting in Ethio Telecom having a monopoly as the state-owned and only operator. 

However the currently government under Prime Minister Abiy Ahmed is attempting to open up the economy and has announced plans split state-run monopoly Ethio Telecom in two and gradually sell shares in both entities to top telecoms companies in a bid to increase competition.The PM has said: 

“…If Somalia with 12 million population has four telecom operators, Ethiopia with over a hundred million population has to also open its doors to multiple telecom operators,” 

Under the plan, a total stake of between 30 per cent to 40 per cent in Ethio Telecom will be sold to operators, provided they are rated as top ten players globally.

The Ethiopian government also routinely cuts the internet mainly for political but also academic reasons.To forestall the leakage of key university entrance exams, the authorities blocked the internet in the past. Activists have slammed the government repeatedly for cutting off the internet because they wanted to control the spread of information and materials relating to anti-government protests and human rights abuse.

A more privatized sector and less governmental interference will hopefully prevent this. 

Both MTN and Vodacom see potential for growth in the Ethiopian market. An MTN spokesperson states:

"MTN has long held the view that Ethiopia offers great opportunities for growth, both for the people of Ethiopia and for the businesses that could serve them, through the liberalisation of the telecommunication market in that country. MTN is excited by the potential opening up of the Ethiopian market as it would be a natural fit for MTN's existing and extensive Pan-African footprint. MTN's licence to provide value-added services in Ethiopia was recently renewed and we continue to maintain an office in Addis Ababa. Ethiopia presents many exciting telecommunication opportunities and we look forward to further discussions with that nation's authorities on potential partnerships and opportunities."

MTN operates in 22 countries across Africa and the Middle East, and Vodacom operates in five African nations.

While Vodacom have said: 

"Ethiopia is an attractive market so it follows that there would be interest. Naturally, this is dependent on what might become available and if it fits within our investment parameters." 

However PM Ahmed Abiy also clarified the conditions for selling shares in the state telco: 

“Certain amounts of shares will be sold gradually in 10, 20, 30 years. We are not giving it up in one go, it is not possible.”

Ethiopians will be offered 5% in the new companies, and between 30% and 40% will be sold to telecoms operators that are top-10 players globally. There’ll be at least a year or two of “intensive study”, he said in televised comments.