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Telecom liberalization takes critical step
Brook Taye (PhD) senior advisor to the Minister of Finance

Telecom liberalization takes critical step

Over 20 firms show interest to consult on Ethio Telecom’s partial privatization

More than 20 international consulting firms have shown keen interest to consult on the partial privatization of the state monopoly, Ethio Telecom.

The Ministry of Finance recently published a notice to hire a consulting firm to provide transaction advisory services to the government of Ethiopia in partially privatizing the state monopoly, Ethio Telecom. Subsequently, more than 20 international consulting firms submitted their expression of interest.

Brook Taye (PhD), senior advisor to the Ministry of Finance, told The Reporter that in response to the Ministry’s request for expression of interest more than 20 companies have submitted their documents until October18, 2019. Brook said that the documents are being reviewed by a technical committee chaired by Beyene Gebremeskel, director general of the Public Enterprises Administration Agency. According to him at least eight companies would be shortlisted by next week as long as they meet the requirements included in the expression of interest.

The Ministry of Finance which is leading the reform in State Owned Enterprises and the full and partial privatization of public enterprises will send Request for Proposal (RFP) to the shortlisted companies. Then the shortlisted consulting firms would submit their technical and financial proposals within one month. Brook said that team of experts who worked on the telecom reform program would not be participating in reviewing any of the bidding process. “It is another technical committee which is chaired by Beneye Gebremeskel currently appraising the documents submitted by companies competing to be hired as a transaction advisor of the partial privatization of Ethio Telecom,” he said.

Brook said Ethio Telecom is currently undertaking asset valuation work to determine the net worth of the company. Ethio Telecom has hired an international consulting firm, KPMG, which is doing the valuation work. “Ethio Telecom is in charge of the valuation work with the support of an international consultant. When it is completed, it will be validated and further decisions will be made by Ministry of Finance experts,” Brook said.

As part of the national economic reform program Prime Minister Abiy Ahmed’s administration has decided to partially privatize Ethio Telecom in October 2018. The government has also decided to license two foreign telecom operators, for the first time in the history of the country.

The government has set up the Ethiopian Communication Authority (ECA) that would regulate the telecom and postal service sector. The authority has commenced work in September.

In a press conference held on Tuesday, director general of ECA Balcha Reba (Eng.) disclosed that the authority is working 16 hours a day to issue two licenses to telecom operators by April 2020. Balcha said that the authority has drafted a telecom regulatory framework which is open for public consultation. The draft regulatory framework is posted on the ECA’s website. Balcha said companies as well as interested parties can forward their comments on the regulatory framework.

The authority will hold a public consultation forum on November 12, 2019. “Any foreign and local company, interested individuals and the government can raise their questions and they would be given adequate clarifications by experts of the authority,” Balcha said.  The proposed regulatory framework will remain open for comment for four weeks.  

ECA intends to issue two additional licenses for telecommunications service operators through a competitive process pursuant to the Communications Services Proclamation of Ethiopia. Balcha said ECA would float the tender by December 2019 adding that by March 2020 the authority would grant two licenses to telecom operators. “That means that we will have three telecom operators including Ethio Telecom by March 2020. Ethio Telecom though it is a long serving company it will be recertified,” he said.

“Until then we will not hold any meeting with any telecom operator to ensure the independence of the authority and the process,” he added. 

ECA has been established on August 12, 2019 through the Proclamation of Communications Service 1148/2019 as an independent Federal Government Authority. ECA’s objectives are to promote the development of high quality, efficient and reliable and affordable communications service throughout the nation. It promotes a competitive market for the achievement of these goals and to promote accessibility and interests of the customers.

ECA issues licenses regulate operators and tariff. It administers radio frequency, domain name and IP address. It also standardises and licenses imported telecom equipment.