Communication authority to float bid by September
The Ethiopian Communication Authority (ECA) is under preparation to float an international tender that would enable it to select two international telecom firms which will operate in Ethiopia by September.
ECA plans to grant two licenses for international telecom firms by end of this year. As part of the national telecom liberalization reform program the authority invited international telecom firms to submit expression of interest which are interested in operating in Ethiopia. Accordingly, 12 telecom companies presented their expression of interest.
Three major telecom operators – Vodafone, Vodacom and Safaricom – created a consortium dubbed Global Partnership for Ethiopia that would bid to win a license in Ethiopia is among the list of companies that submitted expression of interest. Etisalat of the UAE, Axian, a telecommunications company based in Madagascar, MTN, the South African telecom giant that operates in 24 African and Middle Eastern countries, Orange, the French telecom firm, Saudi Telecom, Telecom SA of South Africa, Liquid Telecom of Mauritius and Snail Mobile from China have submitted their expression of interest to ECA. Snail mobile is a virtual mobile service provider. Two companies which are non-telecom operators – Kandu Global Telecommunications – and Electromecha International Projects have also expressed their interest. Another company from neighboring Djibouti-Group of Associate Djiboutian Inventors (GADI), have also expressed their interests.
Balcha Reba (Engineer) director general of ECA, is satisfied with the list of companies which submitted expression of interest. “We managed to attract reputable brands. More companies could come in the next round. But since we are going to issue two licenses the number companies which submitted expression of interest is enough. But this does not mean that we will not accept if more prominent telecom firms want to join the bid in the next round,” Balcha told The Reporter.
Balcha said that the authority has evaluated the documents submitted by the telecom firms. “We have assessed and analysed the relevant information presented by the companies,” he said. “Eight of the companies are qualified to pass to the next round,” he added.
Global Partnership for Ethiopia, Etisalat, Axian, MTN, Orange, Saudi Telecom, Telecom SA, Liquid Telecom are eligible for the next step. “Kandu Global Telecommunications and Electromecha International Projects are not in a position to bid as operators but they can apply for specific type of services. GADI submitted incomplete documents,” Balcha said. “We need telecom operators which provide internet and mobile services, if possible fixed telephone service,” he added.
Balcha said the other eight companies can participate in the bid by providing their technical and financial proposals. “There will be pre-qualification for the technical bid. The companies would submit their detail technical proposals. Their technical proposals will be evaluated thoroughly. In the financial proposals they would present their offer for the license. The company which successfully pass the technical evaluation and offer the highest price for the license would win the bid. We will select the first and the second company and award the licenses,” Balcha said.
Balcha told The Reporter that ECA is preparing the bid document adding that it will be finalized within a week. According to him, ECA would float the international tender by September.
The International Finance Corporation (IFC), the World Bank investment arm, is consulting ECA on the liberalization process. Under the stewardship of IFC four international consulting firms are working with ECA. Coleago consults the authority on the technical side. Johns Day is working on the legal aspect. Ernst & Young is working on the business part while Gong is the media consultant. Gong has hired a local communication company, Cactus Communications.
ECA is planning to finalise the biding process within three month and grant the two telecom licenses by December. The Ministry of Finance is working to partially privatise the national telecom company, Ethio Telecom. The ministry anticipates to sell 40 percent of Ethio Telecom to international telecom firms, five percent to the public and retain 55 percent of the stake under the state control. Deloitte is consulting the ministry in the search for a strategic partner for Ethio Telecom.
The national telecom company, Ethio Telecom, has concerns on the liberalization process. The 126 year state monopoly expressed concern on spectrum allocation. Ethio Telecom does not want telecom infrastructure companies to enter the Ethiopian market. Telecom infrastructure companies like Helios Towers have shown a keen interest to lease mobile towers to the new entrants.
However, the management of Ethio Telecom protests the intention to allow foreign telecom infrastructure companies to operate in Ethiopia. “Since the government has made massive investment on the country’s telecom infrastructure Ethio Telecom can lease its mobile towers and fiber optics cable and generate a substantial amount of revenue,” Frehiwot Tamru, CEO of Ethio Telecom argues. “The new operators can either build their own infrastructure or lease from us,” Frehiwot said.
Ethio Telecom has expressed its concerns in a letter addressed to the ECA.
In responding to Ethio Telecom’s concerns Balcha said that Ethio Telecom should not worry about frequency allotment. “Ethio Telecom holds half of the frequency the country has. We will allocate enough spectrum for Ethio Telecom. But we should also allocate adequate frequencies for the new operators. There should not be any reason why Ethio Telecom worry about spectrum because we make sure that they will continue operating with enough frequencies,” Balcha told The Reporter.
With regards to telecom infrastructure leasing Balcha said ECA supports Ethio Telecom’s plan to lease its infrastructure. “Utilising local resources is a good idea. New operators can share the infrastructure. But we must see if Ethio Telecom has enough capacity,” Balcha said.
According to Balcha, Ethio Telecom has demanded that foreign telecom infrastructure companies should not be licensed. “But this has not been decided. The macroeconomic committee told Ethio Telecom to present its telecom infrastructure inventory report to ECA and then ECA would see if Ethio Telecom has enough infrastructure to lease to new operators. We have requested Ethio Telecom to present their inventory report four month ago. But to date they have not submitted the report,” he said. “We have not decided not to license telecom infrastructure companies. It is a pending case,” he added.
According to Balcha, Ethio Telecom has about 7,200 mobile towers adding that in the coming five years the country needs at least 14,000 towers, based on ECA’s assessment. He said Ethio Telecom has laid 22,000 km long fiber optics cable all over the country. “The country needs to have 50,000 km fiber cable in the next five years. And all these infrastructure development project could cost two billion dollars. This would be an expensive investment for the government. So this should be done by the operators,” Balcha said.
There are three options for telecom operators. They can build their own infrastructure, share the existing infrastructure or lease from telecom infrastructure companies, if there are any. “We are looking at the three infrastructure models. We have not made a final decision not to accept infrastructure companies. This is an ongoing process,” Balcha said.