Dashen Bank and Moneta Technologies, Ethiopia’s largest mobile Digital Wallet platform, partnered with the Silicon Valley, San Francisco based technology giant Flutterwave to up lift the traditional and expensive money transfer with modern platform for free of charge.
Africa’s leading payments Technology Company Flutterwave partnership with one of the leading financial firm in Ethiopia has expanded its activity to 34 countries in the continent.
The partnership that was announced on Tuesday May 20 allows facilitation of money transfer into Ethiopia through Amole, to Amole Wallet, bank accounts and cash pickup locations at over 2,500 locations across the country.
Asfaw Alemu, President of Dashen Bank explained that the new partnership with Flutterwave will serve the Ethiopian economy by making diaspora remittances easier for over 8 Million members of the Ethiopian Diaspora that remit over USD 5 billion annually to Ethiopia.
The statement of Dashen Bank said that international money transfer operators (IMTOs) and businesses on Flutterwave as well as Barter by Flutterwave users can send money into Ethiopia via this partnership.
It added that the remittance service in Ethiopia today is seen by users to be expensive, with manual paperwork and delays making it challenging and time consuming for the diaspora community. This partnership solves these problems by providing instant delivery of funds to the receiver at no fee, with more control of where and how to send money, including transparency from a regulatory standpoint.
Asfaw said that the new service has core value for the country’s economy and enables to boost the legal transfer and cut unnecessary costs the receiver or sender spend on the traditional money transfer.
Yemiru Chanyalew, CEO Moneta Technologies, said that the service provided by Flutterwave application through Amole may take very few seconds and the diaspora shall transfer the money for their beloved one from anywhere just by using the apps without visiting parallel banks or money transfer agents.
“The opportunity we have created with Flutterwave is the consumer has 100 percent control,” he says, adding, “we are very excited to work with Flutterwave and leverage our combined technologies to broaden our offering to the Ethiopian Diaspora community, our customers and merchants to enable cross-border remittance and commerce. At Amole, we are increasingly focused on cashless and eCommerce payments. Our combined efforts in enabling seamless and interoperable remittance and eCommerce payments will drive much desired financial inclusion in Ethiopia,” he said.
Asfaw told Capital that the all the deal with Flutterwave before the launch has been scrutinized by National Bank of Ethiopia, which is the financial sector regulatory body. “Flutterwave is a well-known company on the business and so far they have facilitated USD 9 billion. It is also working with 290,000 business community or companies through their platform,” he added.
He said that the new scheme definitely would bring change on the money transfer and the forex generation for the country, “as a bank it saves the financial firm from other investments to compete with others since we avail such technologies that shall access the foreign currency from the source with providing modern technology.”
Flutterwave, which has key advantage on international payment processing in 150 countries and multiple modes including local and international cards, mobile wallets, bank transfer, and Barter by Flutterwave, has processed over 140 million transactions worth over USD 9 billion and it serves companies like Uber, Flywire, Booking.com and other prominent companies.
Total Ethiopia launches a new coffee shop and tyre service in its service station in Addis Ababa in the Total Bulgaria station with TOMOCA COFFEE PLC, and SEFA & FAMILY PLC- as its professional tyre service provider.
In addition to the Bulgaria station, quality coffee from TOMOCA and a modernized tyre services by SEFA & FAMILY will be provided at the Meskel Square service stations in Addis Ababa.
“This collaboration with TOMOCA, which is one of the preferred coffee brands for Ethiopians, and SEFA & FAMILY, the modernized tyre service provider, will attract new consumers into TOTAL stations and offer a different experience for people to visit our stations,” said Thibault Lesueur, Managing Director of Total Ethiopia.
Besides providing the best quality of products and services with utmost convenience, TOTAL will use this opportunity to share its safety value and safety culture to partners and customers and implement standardized ways of working in all TOTAL service stations.
Total Ethiopia has already proposed different services in its network stations through diversified activities such as a; Café, Restaurant, Car Wash, Total Quartz Auto Service and Tyre Service, to make TOTAL stations a marketplace for its customers.
TOMOCA COFFEE PLC, a long-established family-owned coffee roasting company with over 60 years of experience and SEFA & FAMILY PLC, professional tyre service provider with more than 12 years of experience are a new addition to strengthen the marketability of TOTAL.
Ethio Telecom launches Tier III Ready Modular Data Center further strengthening its 127 years of service to Ethiopia.
Dubbed as the biggest Tier III ready modular data center in Ethiopia, the center will facilitate the smooth operation of the recently launched mobile money service, telebirr.
The newly deployed data center is located around Gola Sefer, equipped with 5 POD (Points of Deployment), 16 cabinets per POD, which can support 10 servers per cabinet. The total capacity of this facility can reach 800 servers. According to Ethio Telecom’s plan, the newly built data center will firstly serve existing service provision such as mobile money and business support systems, and the extra capacity could be used for new business such as colocation and cloud service in the future.
Modular data center has become a mainstream form of data center deployment around the world recently, thanks to its short delivery period and high energy saving ratio.
Huawei delivered Ethio Telecom’s data center within 2.5 months, while the traditional way of deployment would take more than 5 months. Meanwhile, modular data center has power usage effectiveness (PUE) of 1.4, 25% less than traditional data center. After installing Huawei NetEco power monitoring system, it can further reduce 35% of operation and maintenance cost. The routine patrolling and monitoring of the modular facility can be performed by robot.
Mobile financial services have become a significant part of African telecom operators’ businesses after Kenya’s Safaricom pioneered them with M-Pesa in 2007, giving people an alternative to banks.
Ethio telecom plans to recruit 21 million users for the service in the first year of operation, rising to 33 million in five years. The sole telecom provider anticipates that about 40 to 50 percent of Ethiopia’s annual economic output will be transacted on the platform by the end of the five years.
The Ethio telecom Mobile Money platform deployed currently have the capacity of processing up to 100 transactions per second (TPS) and can be easily scaled up to 1000 TPS in the future.
The service is accessible with SMS, USSD and smartphone applications and it can also scale up to more functions in the future.
Ethio Telecom, which had revenue of 25.57 billion birr in the first six months of the current fiscal year, has 52.7 million total subscribers.
On the cabinet meeting held yesterday Saturday May 22, the Council of Ministers unanimously decided to grant a telecom license for one of the two finalists.
The government has been in works to open the telecom industry for two more operators that reach the final stage this week as per the government demand.
Balcha Reba, Director General of ECA that leads the process with the Ministry of Finance, told Capital that ECA will float another bid in the near future to give the second license to another operator.
The highly anticipated spectrum sales has allowed the country to amass USD 850 million from one license, while the second bidder lost after it offered USD 600 million.
In its proposal, Global Partnership for Ethiopia, a consortium of telecom giants and financial firms, proposed to undertake the biggest ever foreign direct investment (FDI) valued at USD 8.5 billion in Ethiopia in the coming 10 years. The amount includes the license fee.
The biggest telecom liberalization process of the century will see the Council of Ministers giving an award for one of the two additional new telecom operators.
The consortium proposal indicates that it will invest USD 8.5 billion in the coming decade that is aligned with the ECA conditions.
Balcha Reba (Photo: Anteneh Aklilu)
ECA stated that the new operators are expected to have coverage of 25 percent in the first year of their operation in the country which will expand to 40 percent in the second year, 55 percent in the third year, 70 percent of in the fourth years, 80 percent in five years, 90 percent in seven years and 95 percent in 10 years time. According to the plan, companies would cover 97 percent of the country on their 15th year operation period and the operation license period will be 15 years.
They said up to 1.5 million professional and quality jobs will be created by their investment. “According to their proposal, they have aligned with the five year digital strategy, 10 year development plan and other sectoral plans besides their business perspective makes it very acceptable,” the Director General told Capital.
The second bidder has proposed USD 600 million which is lower by USD 250 million than the highest offer. “Allowing the company to get a license with this difference for similar frequency allocation and license conductions is unfair, which affects the competition. Due to that the Council of Ministers decided to reject the second offer and decided to issue another bid,” Balcha told Capital.
He said that regarding both companies financial proposal, the bid evaluation committee have been given ten days to revise their price tags and at least price match for the second bidder to the highest offer, “they said as per our business valuation the license is worth our offer.”
Sources said the companies agreed to add some more services rather than revise their offers.
Balcha said that the earning from the first license is good, “it is not far from our business valuation.”
He added that the second offer is much lower than from ECA’s valuation estimate.
Some experts said that the emerging of over-the-top (OTT) media service, a media service offered directly on different platforms via the internet, may affect the value of the telecom business and such kind of liberalization process on the industry.
Balcha said that the value of frequency is time sensitive and have billions of dollars investment, due to that the coming of OTT is stated as a challenge for the telecom industry and spectrum value, “but we will float the second round bid swiftly with some revision on the previous bid document.”
He hoped that on the second round bid a better offer will be tabled that benefits the country.
Early this week the South Africa-based Vodacom Group, which has 34.9 percent share on Safaricom disclosed that the consortium is 56 percent owned by Safaricom, six percent by Vodacom, 25 percent by Sumitomo of the Japanese conglomerate and 10 percent by CDC, the UK sovereign investment fund.
Business Daily reported that Safaricom was allowed to lead the consortium for several reasons, including Kenya’s geographical proximity to Ethiopia.
The current move is more than opening the sector for more players to compete with the government giant. It is a crucial step for the country and its political economy to join the World Trade Organization (WTO) as per the government set timeframe.
The way to liberalization
On the process to grant two telecom licenses, the Ethiopian Communication Authority (ECA) had undertaken massive operations with the support of consultants; the International Finance Corporation (IFC), Coleago Consulting, Johns Day, Ernst & Young, Roland Berger, and Gong.
The Ethiopian Communication Authority started operation in September 2019 with international best practice. At the beginning it introduced new regulatory reform and strategic principles that was discussed with various parts of the community in different occasions.
ECA issued the first public notice on October 22, 2019, to initiate a stakeholder consultation, pursuant to article 35-37 of the proclamation, to collect contributions from all interested stakeholders regarding the proposed new telecommunications regulatory framework and strategic guideline, as well as the market opening process.
Balcha Reba
The national and international stakeholders consultation that took almost a month topics were licensing framework, licensing process, scope of the full service licenses, spectrum (and other scarce resources) management and fees, competition and economic regulation, infrastructure, interconnection and colocation, universal access and national security.
Based on the discussion and the framework, ECA has developed 18 directives, regulation and guidelines in its 18 months lifespan.
At the same time the authority had also issued an expression of interest (EoI) in May last year that attracted 11 companies and a consortium that includes influential players in the sector.
Balcha Reba, Director General of ECA, told the executives and advisory board on the briefing held on May 20 at the Office of the Prime Minister that the final bidding process was very rigorous on the aim to attain qualified operators on the telecom industry.
The major interested companies are Global Partnership for Ethiopia Consortium, MTN, Orange, Etisalat, Axian, Liquid Telecom and Telecom SA.
Profile
Global Partnership for Ethiopia that includes Vodafone, Vodacom, Safaricom, Sumitomo Corporation, CDC Group of UK development finance institution, come under consortium with finical support of United States International Development Finance Corporation (DFC).
It is working on 26 countries of which 8 in Africa. It has 735 million customers and its annual revenue is USD 41 billion from mobile service and USD 19 billion from fixed and internet.
MTN, a South African company, has business in 20 countries of which 15 in Africa. It has 251 million subscribers and its revenue is USD 8.6 billion from mobile and USD 964 million from fixed service.
The other company that expressed its interest to involve on the bid and changed its strategy to get share on Ethio Telecom is Orange. It is working in 25 countries including 16 African countries and its mobile service customers are 207 million and 45 million in fixed line. Orange’s annual revenue is USD 48 billion from mobile and USD 35 billion fixed services. It makes Orange the biggest company in terms of revenue from interested partisans on the process even compared with the consortium.
Etisalat of UAE is working in 16 countries including 11 in African market. It has 139 million and 6 million mobile and fixed subscribers. Its annual revenue is USD 11 billion and USD 6.8 billion revenue from mobile and fixed services respectively.
STC is the Saudi telecom operators with a reach of four countries in the gulf and Malaysia. It has 21 million and 2.1 million mobile and fixed line subscribers respectively.
The Mauritius based Axian has 15 million subscribers at its market in 5 African countries.
Telecom SA is engaged in 6 countries, Liquid Telecom of UK based company is not working on mobile operation, Snail Mobile of China is a virtual mobile operator with 17 million subscribers.
RFP
The liberalization request for proposal (RFP) was issued in November 27 and nine interested companies including 5 telecom companies, one virtual mobile operator, and three non-telecom operators have been attracted.
The five telecom operators are the consortium, MTN, Orange, Etisalat and Zain of Kuwait, which was not show up on the EoI.
Balcha said that these are the potential companies that shall be participated under our criteria on the bid document.
On the bid opening date on April 26, MTN and the consortium participated. “Meanwhile, it is said two offers from the consortium- which in itself is a world class companies and MTN the African giant,” Balcha explained.
“Why two offers came to existence is because stringent conditions have been put in the bid document on the financial and technical criteria that shall be affordable with the country population and area. Because of that, the major shares of interested companies are unable to come,” the Director General elaborated.
Orange preferred to participate on the partial privatization at Ethio Telecom, “because mobile financial service and third party infrastructure providers are not allowed, Etislat also preferred play on the privatization.”
Technical and financial criteria
The technical criteria on bid document stated that the company that demands to be player on Ethiopian telecom business should have at least 30 million mobile subscribers and at least five million subscribers in three consecutive years until 2019 in different countries.
It has also asked that the companies’ activity on emerging markets and the qualification document justified from different regulatory bodies in the countries they operate.
Their involvement of fiber optics development as a nation, and market share were also stated as a criteria.
On the market share criteria companies must have 25 percent market share on the countries that have over 35 million subscribers. 30 percent market share for less than 35 million subscribers.
The companies supposed to deploy 3G by at least 60 percent and 30 percent for 4G.
Their net worth for consecutive three years until 2019 should be USD one billion. Earnings before interest tax, depreciation and amortization are not less than USD 500 million for 2017 to 2019.
Net debt to earnings before interest tax, depreciation and amortization has been also one of the criteria to get a company that is free from debt.
The bid bond was USD 10 billion and the stand by letter of credit was USD 500 million.
Balcha said that there are different factors that condensed the number of participants, “the global pandemic, the law enforcement at the north of the country, the concern in relation with GERD and border issue with Sudan have been mentioned by interested actors as uncertainty.”
Over the top (OTT), killer applications, that are expanding from time to time have been stated as another issue, “they said the third party infrastructure providers shall compensate the effect of OTT otherwise the network and capital expenditure cost will be high.”
The rejection of mobile money and third party infrastructure providers by the government has been also stated as a reason for companies not to be part of the bid.
“As per our evaluation we did understand that the process is not lost potential bidder or direct/implied opportunity. For instance some potentials like the Dutch Telecom, T-Mobil, British Telecom and other Chinese operators are not operating in Africa,” he said.
On the financial evolution the key factor is spectrum value or license selling. Average revenue per user (ARPU), and market concentration that measure by Herfindahl index, which determine market competitiveness are the measurement for value of spectrum.
Fixed line broadband penetration density, GDP per capital, inflation, exchange rate, tax rate, population density, and urbanization/rurality are other areas to estimate the license value.
“As ECA we consider that we get strong offers however there was a 29.4 percent difference between the highest and the second offer,” the Director General explained the bid evaluation committee assessment. He elaborated that such kind of difference is common on similar process in other countries, “for instance the experience of Morocco shows that.”
Balcha said the spectrum value is calculated on dollar pre megahertz per population; and thus on that it is good offer compared with global experience.
He said that the authority have negotiated with companies to come up with a revised offer, while their response was that as per the RFP condition their offer is best and final.
He said that the new scheme definitely would bring change on the money transfer and the forex generation for the country, “as a bank it saves the financial firm from other investments to compete with others since we avail such technologies that shall access the foreign currency from the source with providing modern technology.”
