Vodacom to bid in consortium for Ethiopia licence

The largest wireless carriers operating in Africa are starting to form partnerships ahead of making offers for new licences to be awarded by Ethiopia, which is opening its telecommunications industry to international companies.

Vodafone Group is part of one consortium planning to bid for a licence. The UK carrier has teamed up with its South African unit Vodacom Group and Nairobi-based affiliate Safaricom, according to the Kenyan company’s chief financial officer, Sateesh Kamath.

The companies have engaged with CDC Group, the UK development finance institution, to assess interest in joining their bid, people with knowledge of the matter said. The Vodafone-backed consortium has previously reached out to Cerberus Capital Management about teaming up, according to the people, who asked not to be identified because the information is private.

Kamath declined to comment on potential additional partners to the Vodafone-led alliance. Spokespeople for Vodafone, Vodacom, CDC and and Cerberus declined to comment.

“The family will bring its combined global strengths to the table, with Safaricom bringing the region’s strength, Vodacom bringing an African strength and Vodafone bringing a global strength,” Kamath said in an interview ahead of his move to a new job at Vodafone starting on 1 July.

Ethiopia announced the break-up of its state monopoly shortly after Prime Minister Abiy Ahmed came to power two years ago, part of a broader privatisation plan that also includes the sugar and rail industries, among others. The news immediately drew the attention of Africa-focused carriers, who have long seen the Horn of Africa nation and its population of more than 100 million as a fertile market for expansion.

MTN, Orange keen

MTN Group, Africa’s largest wireless carrier by subscribers, and France’s Orange have both expressed an interest in the privatisation process. Both companies reiterated that position when contacted, declining to comment on whether they would bid solo or as part of an alliance.

The government is looking to sell a minority stake in state-owned Ethio Telecom alongside two new licences, a move designed to attract foreign investment and improve competition and quality of the sector. The transactions were meant to be completed by now but have been delayed by the coronavirus pandemic and the length of time needed to draw up regulations and valuations.

Interested buyers now have until 22 June to submit expressions of interest, with the International Finance Corp acting as adviser.

“It is very encouraging for us to see several companies pulling together resources that will be required to acquire these valuable spectrum licences,” Brook Taye, adviser to Ethiopia’s finance ministry, said in an interview. “Having a consortium of companies coming in and showing interest is a great testament to the appreciation to the value of these spectrum licences.”  — Reported by Samuel Gebre, Loni Prinsloo, Eric Ombok and Myriam Balezou, (c) 2020 Bloomberg LP