Telecommunications giant Safaricom PLC together with its parent companies, Vodafone Group and Vodacom Group Limited have formed a joint venture in their bid to enter the Ethiopian Market.
Dubbed Global Partnership for Ethiopia, the consortium is bidding for one of Ethiopia’s two telecommunications licenses up for grabs being auctioned in that country.
The three partners have now signed an agreement to borrow up to Sh500 million ($55.7 billion) from the US International Development Finance Corporation (DFC).
The DFC loan deal is part of the trio’s efforts to fundraise for the project should they be awarded the license. The companies expect the financial investment towards the Ethiopian market to cost about Sh111 billion ($1 billion).
An up to sh55.7 billion ($500 million) loan to the Vodafone-led Global Partnership for Ethiopia that will finance the design, development, and operation of a new private mobile network provider and the acquisition of a mobile network provider license,” DFC said in a statement.
“The project is expected to have a highly developmental impact through the creation of a new private telecommunications network that will increase connectivity in Ethiopia while utilizing trusted technology.”
Safaricom had earlier said it was willing to take on more debt as the majority shareholder in the consortium with a stake of 51 per cent. Vodacom has a 5 per cent stake while the rest is shared out among various financial investors.
Safaricom added that they are ready to abide by the conditions set by the Ethiopian government. Ethiopia has a population of about 110 million people with 50 million mobile phone subscribers, making it avast potential market for mobile services.
The Ethiopian Communications Authority announced that it had received expressions of interest from scores of firms including telcos and non-telecom operators by June 22.
They included the Safaricom consortium, Etisalat, Axian, MTN, Orange, Saudi Telecom Company, and Telkom SA.
Vodacom recently told its investors that the capital expenditure for the potential Ethiopian entry is not yet clear, adding that the auction of the licenses is anticipated in February or March next year.
Ethiopia’s telecom sector transformation comprises of Ethio Telecom,the sole supplier of telecom services in the country and Ethiopian Communication Authority (ECA) which is in charge of licensing for the two companies that will be successful in entering in the country.