Africa’s largest wireless carrier no longer interested in Ethiopian licence

As Ethiopia reopens bidding for the sale of a second telecom operator licence to international firms, the process seems to have received an early setback as MTN Group, Africa’s largest wireless carrier is not likely to resubmit a bid, according to sources familiar with the matter.

The telecom operator offered $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 telecom operator 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 ten times that amount over the next decade.

The government has also put a 40% minority stake in state firm Ethio Telecom up for sale alongside sugar assets, part of a privatization plan to raise funds for debt repayments and to boost the economy.

France’s Orange SA has shown an interest, having previously held a management contract with the firm in the early part of last decade.

Civil War

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 Ethiopia’s 110 million people have mobile-phone subscriptions, though improving services and adding customers will require significant investment.

© Bloomberg