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14 July 2020

A dozen operators plan to bid for Ethiopia’s new licences, including Orange

Ethiopia is the location for the latest new opportunity for MNOs to expand into a new geography. This is becoming increasingly rare, and established operators are more likely to face a challenge in an entrenched market, if regulators allow a new entrant, than get the chance to move into a brand new country. But a few markets remain to be deregulated, and Ethiopia is one.

The plan is to sell 40% in monopoly incumbent Ethio Telecom and grant two new licences, removing an old bar on foreign investment in telecoms. 12 international companies are participating in the race for the new licences, lured by the high growth potential in a market with 110m people, but with ageing infrastructure and low levels of mobile broadband penetration.

Orange is one of the interested parties, as part of a renewed push to expand on its strong presence in parts of Africa (mainly the Francophone north and west). But it will have stiff competition. Safaricom of Kenya is bidding as part of a consortium called Global Partnership for Ethiopia, with its major shareholders Vodafone and Vodacom (South Africa-based Vodacom is majority-owned by Vodafone, while Safaricom is 35% owned by Vodacom and 5% by Vodafone).

Other operators who registered bids are two other South Africa-based groups, MTN and Telkom; from the Gulf, Etisalat of the UAE and Saudi Telecom; plus Axian, Econet, Liquid Telecom and Snail Mobile. Two non-operators also registered bids – Kandu Global Telecommunications and Electromecha International Projects.

Orange’s CEO Stephane Richard said, in a recent interview with French newspaper Les Echos, that his company would benefit from further African expansion. It currently operates in 18 countries in Africa and the Middle East, but has its eyes on the huge markets of Nigeria and South Africa, as well as Ethiopia, as potential targets.

Richard said much of the company’s revenue from the MEA region is driven by the success of its mobile financial services portfolio, Orange Money. “It could make sense to be in economies such as Nigeria and South Africa. If one considers there are things to do, the timeframe I am considering is rather a few months than a few years,” he said.

Orange exited South Africa in 2016, but at that time was offering very limited services. Since there are unlikely to be spectrum licences set aside for new entrants any time soon, one route might be to take a stake in MTN – the two operators cooperate in several projects including the Mowali mobile payments service and the 2Africa subsea cable consortium.

The French company has been eyeing Nigeria, which is close to some of its existing markets such as Niger and Cote d’Ivoire, for some years. In 2017 it was tipped to buy a 65% stake in Etisalat Nigeria, but the Gulf operator withdrew from the market entirely.