The Companies Competing to Break One of Africa’s Last Mobile Monopolies

By Tom Leins

After years of speculation that market liberalization was coming in Ethiopia, in May 2020 authorities kick-started the long-awaited licensing process. The Ethiopian Communications Authority (ECA) issued a request for expressions of interest (EoI) for two new telecom licenses.

With the deadline now passed, we look at the bidders vying to disrupt one of Africa’s last mobile monopolies.

The Status Quo

State-run Ethio Telecom (formerly Ethiopia Telecom Corporation, ETC) launched wireless services over its GSM-900 network in April 1999, having been awarded a concession the previous year.

More than 20 years on, the telco remains the country’s only mobile operator, serving an estimated 45 million subscribers. But it seems Ethio Telecom’s days are numbered. A variety of well-known international players are keen to enter a market where the wireless population penetration rate is less than 50%—among the 10 lowest figures on the whole continent.

The Bidders

Within days of the June 22 deadline, the ECA named the would-be bidders as: Global Partnership for Ethiopia, Orange Group, MTN Group, Telkom South Africa, Axian Group, Saudi Telecom Company (stc), Etisalat, Liquid Telecom, Snail Mobile, Kandu Global Telecommunications, and ElectroMecha International Projects.

A twelfth submission from an unnamed company was deemed incomplete.

Licensing Conditions

As per official documentation, the two licenses on offer will be technology-neutral, offer “a range of spectrum across multiple frequency bands,” and be valid for 15 years with the possibility of further renewal.

As per official documentation, the two licenses on offer will be technology-neutral, offer “a range of spectrum across multiple frequency bands,” and be valid for 15 years with the possibility of further renewal.

The basic terms and conditions of the concessions on offer will feature requirements to meet or exceed specified population and geographic coverage targets, as well as an obligation to commit to “reasonable” tariffs, universal accessibility, and teledensity targets.

The Major Players

First, we look at the telecom giants going head-to-head for a license.

Orange Group

Paris-based Orange Group boasts one of the largest African footprints of any international operator. And it’s made no secret of its desire to strengthen its presence in the region further.

Paris-based Orange Group boasts one of the largest African footprints of any international operator. And it’s made no secret of its desire to strengthen its presence in the region further.

In January 2020, when opening its new regional headquarters in Casablanca, CEO Stephane Richard said, “Orange is one of the rare international groups to have made the strategic choice, 20 years ago, to seek to develop in Africa and the Middle East. We have always been convinced of the immense potential of this continent. In many ways, it can be seen as a model for digital transformation; mobile money is a great example of this.”

Orange already invests EUR1 billion a year in Africa and the Middle East to improve the connectivity and performance of its networks. It arguably ranks as one of the top candidates for a new license.

MTN Group

With 17 mobile businesses across the continent, South Africa’s MTN Group has long coveted a license in Ethiopia. The company is on record professing an interest in the market since at least 2012.

Last year, chief executive Rob Shuter said, “There are a few large markets that are under-penetrated and where there is scope for a number one or number two operator, like Ethiopia.”

MTN is widely recognized as one of the most valuable brands in Africa, and its experience in the sector will likely see it perform strongly against rival bidders.

Etisalat

UAE-based Etisalat boosted its presence in Africa in May 2014. It completed the acquisition of French media group Vivendi’s 53% shareholding in Morocco-based Maroc Telecom for a final consideration of EUR4.1 billion.

See if you can keep up with what happened next.

In a strategic reshuffle, January 2015 saw Maroc Telecom pay EUR474 million for Etisalat’s wholly-owned West African subsidiary Atlantique Telecom, reconfiguring Maroc Telecom as a pan-African player with operations in 10 countries.

In mid-2019 Maroc Telecom acquired Chadian operator Tigo Chad from Millicom International Cellular, increasing its footprint further. While Etisalat was the company named on the paperwork, any pursuit of an Ethiopian concession will surely involve Maroc Telecom too.

Global Partnership for Ethiopia

While the name may be unfamiliar, the partners behind Global Partnership for Ethiopia are all well-known entities: UK-based Vodafone Group, its majority-owned African unit Vodacom Group, and Kenyan mobile market leader Safaricom, which is part-owned by Vodacom.

For its part, Vodacom currently offers mobile services in South Africa, Tanzania, Democratic Republic of Congo, Mozambique, and Lesotho. In the build-up to the licensing process, Safaricom was one of the most enthusiastic parties, despite its executive team cautioning that the total cost of license and spectrum could reach $1 billion.

Saudi Telecom Company (stc)

Despite its status as one of the best-known telecom groups in the Middle East, Saudi Telecom Company (stc) has limited experience within Africa.

Its interests in the continent are restricted to a minority indirect shareholding in South Africa’s Cell C.

However, further exploration of Africa may be on the horizon, with stc completing a due diligence study regarding its proposed acquisition of Vodafone Group’s majority stake in Vodafone Egypt in July 2020.

If that deal comes to fruition, the 55% stake is expected to be valued at $2.4 billion.

The Outsiders

Alongside the household names, a number of lesser-known companies have also registered their interest in the process.

Liquid Telecom

While Liquid Telecom is best known for deploying 70,000km worth of fiber-optic infrastructure—which it claims represents “Africa’s largest independent fiber network”—it’s unknown in the cellular sector.

However, Liquid’s parent company Econet Global is well known on the continent and operates cellular networks in a number of markets including Zimbabwe, Burundi, and Lesotho.

Axian Group

Madagascar-based Axian is owned by the Hiridjee family, a French family of Indian descent, who settled in Madagascar 150 years ago and initially set up business in the textile industry before diversifying into real estate, energy, financial services, and telecommunications.

The Axian Group name was introduced in 2015 and covers operations in 34 countries. In terms of its telecom prowess, Axian Group owns Madagascar’s dominant telco, Telma, alongside joint-ventures in Comoros, Reunion, Mayotte, Senegal, and Togo.

Telkom SA

Best known as a fixed-line operator, Telkom South Africa belatedly entered its domestic mobile market in October 2010, where it has struggled to gain traction against larger rivals MTN and Vodacom.

It remains to be seen whether it would fare any better outside of South Africa.

Snail Mobile

The presence of Snail Mobile on the list is a genuine curveball. China’s largest MVNO by subscribers, Snail Mobile commenced commercial services in June 2014 and has enjoyed great success targeting gamers with specially-designed handsets and an integrated app store that allows users to download and play games without paying for data traffic.

The presence of Snail Mobile on the list is a genuine curveball. China’s largest MVNO by subscribers, Snail Mobile commenced commercial services in June 2014 and has enjoyed great success targeting gamers with specially-designed handsets.

The MVNO reached the 11 million subscriber milestone in December 2017. TeleGeography estimates that this figure hit 17.5 million in Q1 2020.

The Non-Telcos

Bringing up the rear are two companies that currently lack experience in the mobile sphere:

Kandu Global Telecommunications

Beverly Hills-based Kandu Global Telecommunications asserts that its objective is to “facilitate international trade and commerce via our e-commerce website KGx, a full-service e-wallet remittance solution—KanduPay—and market-specific news services that coincide with remittance and commercial trade routes, Kandu Global News.”

ElectroMecha International Projects

ElectroMecha was established in 2004 as a general trading and contracting company for undertaking medium voltage and high voltage cable works within the oil and gas sectors and general industry.

 

Following the June 22 deadline, ECA released a statement: “The Ministry of Finance and ECA would like to thank all those potential bidders who have responded to the request and expressed their interest. As the ECA prepares for the next stage, it will keep the participants informed and engaged as the process moves forward. ECA remains fully committed to fulfill Ethiopia’s telecommunications sector reform and enhance its digital transformation.”

No timeframe has been revealed for what is sure to be a tough decision.

Tom Leins

Tom Leins

Tom Leins is a Senior Research Analyst for TeleGeography’s GlobalComms Database. Based out of the company’s UK office, he also contributes to the company’s daily CommsUpdate newsletter, which includes his popular weekly MVNO Monday round-up. MVNO industry aside, Tom has developed a strong specialization in the U.S., Latin America, and the Caribbean, tracking mergers and acquisitions, spectrum auctions, regulatory developments, market opportunities, and growth trends.

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