Telecom’s privatization, liberalization draws a step closer

    (Photo: Anteneh Aklilu)

    The telecom liberalization and privatization process has progressed to another step. The bid for including two additional operators is expected to be floated in the coming few weeks.

    The process to open up some monopolies and partial privatization that had been laid by the former ruling coalition EPRDF, that is, from mid-2018, has now been progressing with regards to the telecom sector.

    Before arriving at this decision this week, there have been extensive discussions conducted both on direct meetings and virtual feedback gathering inclusive of emailed documents.

    Early September, in a consultation held at the Office of the Prime Minister (OPM) chaired by Prime Minister Abiy Ahmed inclusive of different stakeholders like the privatization committee, which comprised individuals from different direction like the business community, different professions and political parties, and macroeconomic team; evaluated the process and decided to conduct three consultations that were organized by the  Ministry of Finance, Ethiopian Communication Authority (ECA), and Ethio Telecom as the last public dialogue to transfer to the next step. The outcome of the three and last consultation have been presented in the meeting at OPM on Monday October 26 and the issue was discussed.

    (Photo: Anteneh Aklilu)

    PM Abiy, who led the discussion, emphasized that the government is not deciding to open up the telecom sector just for the sake of others to say that we are opening the economy, “We are conducting the process for the benefit of our national interest, not for others,” he elaborated.

    The process will entail two different schemes; this includes, partly selling the share of Ethio Telecom on the direction of privatization and selecting to more operators, which is the liberalization process.

    Balcha Reba, head of ECA, said that after the final review on bid document and process with the relevant body, the document it will be floated in the coming few weeks to get two more operators.

    The process of selecting two operators is expected to be finalized until mid 2021. The bid for adding shareholders at Ethio Telecom is also expected to be on air in the near future. The government has disclosed to sale out 40 percent of state monopoly share to foreign investors and five percent to Ethiopians.

    “We expected that the two processes are going parallel,” Balch told journalists after the OPM discussion on Monday. The final decision is now up to the higher body of the government.

    Recently, ECA floated an expression of interest and 12 companies from different continents and businesses besides involving the telecom sector have shown their interest in being the two new operators.

    Early Monday, at the press conference held at Hilton, Balcha highlighted that some individuals described COVID 19 as a threat. He expressed that they argued that the time would not be good for selling new spectrums and may even affect the revenue that the country is supposed to get in the process.

    “Some experts compared the economic slowdown by the pandemic with that of the financial crisis in 2007, with regards to the adverse effects on the financial sector. But the two are different. The 2007 crisis was the result of the effect on finance sector that significantly damaged the economy. The COVID 19 effect is not correlated with the finance sector, but the finance sector is in good hands and keen to provide finance for investments that has slowed down because of coronavirus. Therefore for investors it is not so much a worrying time since the process will not affect the process of adding more operators. Furthermore, with good and competitive rates the country will receive great benefit,” he clarified.

    According to Balcha, the expression of interest targeted to prove the interest of new investors and evaluate the concerns of those who were afraid that COVID 19 may affect the process.

    He added that the COVID 19 challenge clearly shows the need of the telecom sector which further demonstrates how lucrative the business is for the sector.

    “The telecom service was a good instrument in the lockdown period,” experts said.

    To realize the opening up of the telecom sector, ECA has issued and drafted different directives and regulations.

    So far it has issued 18 directives.

    The companies that have shown interest are: Global Partnership for Ethiopia (a consortium of telecom operators made of Vodafone, Vodacom, and Safaricom), Snail Mobile, Liquid Telecom, Telekom SA, etisalat, Liquid Telecom, Orange, Axian, Saudi Telecom Company and MTN from telecom operators.

    Non telecom operators that expressed their interest are Kandu Global Telecommunications, Electromecha International Projects and Group of Associate Djiboutian Investors, who have not fulfilled the demanded requirements on the expression of interest requests.

    Abiy has stressed that individuals who are involved on the process of privatization and liberalization of the telecom sector should work amicably and keep themselves from misdemeanors.

    He warned that if there are any illegal acts it may take time to trace but eventually the acts will be identified.

    New operators are expected to have coverage of 25 percent in the first year of their operation in the country that will expand to 40 percent in the second year, 55 percent in the third year, 70 percent of in four years, 80 percent in five years, 90 percent in seven and 95 percent in 10 years time. According to the plan companies would cover 97 percent of the country on their service by their 15th year operation period and the operation license period will be 15 years.

    “Any country would not have full coverage on the telecom sector but at least close to hundred percent shall be tried to be filled,” the ECA head told Capital.

    Regarding to universal access service, the authority targeted to achieve the same in five-years-time.

    Balcha said that the Request for Proposal (RFP) will be floated until mid this month. “The process shall be finalized until April next year,” he said.