The government of Ethiopia has issued a Request for Proposal (RFP) for telecom operator’s license on November 27, 2020 and interested bidders can buy the bid documents from the Ethiopian Communications Authority (ECA) for USD 15,000, it was disclosed.
Speaking at a press conference on Friday, November 27, 2020 at the premises of the Ministry of Finance, state minister of Finance, Eyob Tekalegne (PhD) said that this bid will stay afloat for 90 days and companies intending to take part in the bid should buy the document that states qualitative and financial capability requirements by bidding operators.
For this purchase, any operator needs to first send in a letter stating intent for bidding until December 10, 2020.
The Request for Proposal announcement by the ECA indicates that the telecom sector has been undergoing a reform whose objectives “are to expand reliable and accessible communications for all Ethiopians in order to enhance the economic and social development of the country and promote rapid economic transformation and growth.”
Explaining that, “greater connectivity will lead to improvements in the quality of life for Ethiopians and maximize the opportunities presented by the digital economy, the ECA said it intends to award two “nationwide full service telecommunications licenses through a competitive bidding process.”
Accordingly, the bid is said to be “targeting world-class telecommunications operators to become the new license holders within Ethiopia’s rapidly growing economy.”
The RFP will be locally published across large circulation publications, as well as in the Financial Times on Monday and the bidders must present their proposals by March 5, 2020.
Speaking at the press conference, Balcha Reba (Eng.), director general of ECA said that this is part of the government’s reform measures for the past two years during which 18 directives were prepared to regulate the telecom sector. Fourteen of these directives were made ready after public consultations to get feedback from interested parties.
Reminding that in a previous expression of interest announcement, operators from Asia, Europe, the US, the Middle East, as well as Africa had shown their interests, Balcha said that the bid will be closed at 10:00 am on March 5, 2020 and opened on the same day at 11:00 am East African time.
Eyob, for his part, stated that in order to bring about a strong telecom sector, the government has decided to open the market for competition and strengthen ethio-telecom to brace itself for competition by selling 40 percent of its shares to investors.
In this regard, the government has followed a 2+1 approach where two operators apart from the state operator would enter the market and provide full telecom services, he said. According to Eyob, the bidding process will be highly competitive and transparent.
Eyob also said that they have hired consultants to study how much the country would get from the spectrum sale and this finding has been triangulated with other similar assessments to get a clear picture of what could be gained from the sale.
This bid will be open for all operators interested in entering the market and it won’t be limited to operators that expressed their interest in a prior announcement.
“The two winners will work along with ethio-telecom,” he said. “We have made a significant advance on the liberalization aspect.”
According to Eyob, operators from across the world have shown interest to bid for the licenses.
“This is the last frontier as far as telecom is concerned,” Eyob added.
The evaluation process includes critical qualitative and financial criteria that were identified from three sets of valuations to get a clear picture of what the country could get out of the license sales. Hence, in this process, the next three months are critical, he added.
After the bid closes, the evaluation/assessment of the bidders’ offers will be completed within 40 days after which the first telecom operation licenses will be issued.
Eyob also made it clear that licensed operators will be allowed to build their own infrastructure but independent power and tower companies won’t be allowed to build and rent infrastructure because of ethio-telecom’s huge investment in the sector that can accommodate its operation as well as the new entrants’ operations. But, as the banking sector is reserved only for Ethiopians, no operator will be allowed to venture into mobile banking.
The state minister said that the operation in Tigray, which he said is intended to do away with an illegal group that wanted to wreak havoc both in the country and beyond, should not affect investor interests as well as bid price. Rather, as the avoidance of such groups decreases uncertainty, it should enhance interests, he added. But, as investors were concerned about the matter, the Ministry of Finance along with the ECA had briefed potential bidders last Monday to explain what is on the ground, it was disclosed.