Concerns raised by potential telecoms investors have forced sector regulators to delay the process of issuing a second telecom operator license.
Close to a dozen investors responded to a call from the Ethiopian Communications Authority (ECA) in June 2023, submitting requests for qualification in a bid to become the country’s third telecoms operator.
However, the process has hit a snag as the potential investors expressed concerns about the investment environment and fears regarding roll-out targets.
The ECA will “take time” to address the concerns, senior Authority officials disclosed to The Reporter.
The Authority and the Ministry of Finance held public consultations with the potential investors after they submitted their expressions of qualification.
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The concerns were raised during and after the discussions and the potential bidders forwarded their recommendations on a few things, according to Balcha Reba (Eng.), director-general of ECA.
“It is better to take time and check on the recommendations that will benefit us as a country. We need time to identify what we should do,” he said.
The Director-General did not disclose how long the process would last. He disclosed the third telecoms operator license would have been issued by the end of this year if the process had gone smoothly.
The Authority has yet to call for expressions of interest and requests for proposal, as was initially planned.
A communiqué forwarded by the Authority to The Reporter explains how the process faced hiccups after investors raised concerns on the “conditions that make a difference in relation to entering the market together with other telecommunications operators at the time of the first license.”
The authorities are considering measures to ease any potential disadvantages for “late” market entrants, according to the communiqué.
It states the Authority prefers “to take time to reconsider the licensing process by looking at and examining the issues and conditions raised by the investors.”
If necessary, the officials will make “adequate preparations and improvements that create a favorable market environment for investors.”
Balcha believes it would have been best if both private telecom licenses had been issued when Safaricom Ethiopia Plc won an 850 million dollar bid to become the country’s first private telecoms provider in 2021.
“Becoming the first in the market has an advantage, and it could be a problem for next entrants,” said Balcha.
Safaricom Ethiopia has accrued four million active customers since launching its services. It has also reached over 25 percent coverage. The operator is obliged to grow coverage to 70 percent within its first five years of operation.
The Director-General observes meeting the roll-out targets may be difficult for the third operator, as it will be in direct competition with the behemoth ethio telecom as well as Safaricom Ethiopia.
“It will scare those coming late,” he said.
The Authority says it will consider including terms “that would be exceptional to new entrants” in an effort to ease the fears.
Investors have suggested involving a third party to provide an infrastructure leasing service as a method to offset expenditures.
“Other issues have also been raised within the general investment environment. We will work with every concerned government office for solutions,” Balcha said.
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