MTN Reveals Plans to Expand to Ethiopia for Growth

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AFRICA’S largest telecoms firm, MTN, was considering having another goal at becoming a mobile operator in Ethiopia after losing to Kenya’s Safaricom, the group said in a recent statement.

 

Ethiopia’s communications regulator awarded Safaricom, a member of a consortium led by Vodafone, the parent company of Vodacom, MTN’s rival, with a license to operate telecom services in Ethiopia, Africa’s second-most populous country.

 

MTN chief executive Ralph Mupita told shareholders during the company’s 26th annual general meeting (AGM) held virtually recently that MTN would apply its mind should the Ethiopian government reissue the license.

 

“There are views that the Ethiopian authorities will reissue the license with mobile money, and if they do that in a relatively short period of time, we will apply our minds on the issue, we have not made a firm decision on that,”Mupita said.

 

The Vodafone consortium is reported to have bid $850 million, (R11.7 billion) while MTN which made a bid in partnership with the Silk Road Fund from China placed a $600m bid.

 

Mupita said while MTN was saddened at not being named winning bidder, the group remained comfortable with its bid.

 

“We took an approach that the opportunity, as strategic as it was, needed to meet our capital allocation framework and the hurdles that we saw given the license conditions. We were particularly focused on the lack of mobile money in the license regime, and there were some issues around how the telcos constructs would be accommodated within Ethiopia. We certainly priced for those things and near-term risks that we saw, and we felt that the financial bid there was appropriate,” Mupita said.

 

MTN has a growing financial services segment, and services 46.6 million mobile money customers allowing them to send and receive money from their mobile devices.

 

Ethiopia, with a 112 million-strong population, is considered to be the next frontier for telecoms, given it is one of the last countries in the world to end government monopoly.

 

The Vodafone-led consortium is dubbed the Global Partnership for Ethiopia and also comprises Japan’s Sumitomo Corp and the UK’s development institution, the CDC Group.

 

Commenting on the success of its bid, the consortium said that it would provide infrastructure, affordable, accessible and high-quality internet connection services to Ethiopians, and is committed to creating 1 million jobs in that country over the next 10 years.

 

Vodafone group chief executive, Nick Read, said also that this was a significant development for Ethiopia, which was one of the last very large markets in the world to introduce telecoms competition.

 

“We want to play a transformational role in ensuring Ethiopia’s huge economic and developmental potential is realised through the deployment of next generation connectivity and digital services, creating an inclusive and sustainable digital society,” it reads.

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