The concept of “telecommunications liberalization” means introducing competition into the telecoms sector by allowing commercial enterprises to set up new telecoms businesses as long as they comply with government-defined policies, laws, regulations, and directives. The Ethiopian Communications Authority (ECA) has sought interest from international telecommunications operators to manage two new telecoms licenses in Ethiopia, which would potentially allow three operators with licenses to deliver telecommunications services in Ethiopia: Ethio Telecom and two new license holders. On 22 May 2021 one license was awarded to the Global Partnership for Ethiopia, out of the potential two available. The launch of another tender process is currently under consideration for the second license. Liberalization of the telecommunications sector should not be confused with the partial privatization of Ethio Telecom. Issuing the first new license (to the Global Partnership for Ethiopia) is taking place simultaneously, in addition to the partial privatization of Ethio Telecom, which is a separate process. Liberalization of the sector aims to enable Ethiopia to maximize the transformational opportunities presented by the digital economy. Opening of the sector to healthy competition will lead to improved telecommunications services and with the passage of the Communications Service Proclamation (the “CSP” or “Proclamation”) on 12 August 2019, the Ethiopian Government effectively lifted restrictions on the telecommunications sector, allowing local and international telecommunications operators to take part and offer their services in Ethiopia for the first time in the nation’s history. The Ethiopian Communications Authority (ECA) was established by the CSP as an independent federal government regulatory authority. This Proclamation mandated the ECA to regulate the telecommunications sector and as set out in its objectives, to promote: the development of high quality, efficient, reliable and affordable communications services throughout the nation; a competitive market for the achievement of these goals; both accessibility and the interests of customers. The ECA is also mandated to manage the liberalization process.
After careful examination of all the different available options, the Government of Ethiopia reached the decision that liberalizing Ethiopia’s telecoms sector is the best way forward to bring improved connectivity for Ethiopians. Greater competition helps to grow markets and brings with it economic and social benefits. New expertise and more competition will help us develop our telecommunications sector faster so we can embrace e-commerce and digital payments as other countries across Africa and other parts of the world have successfully done. Introducing competition to the sector will lead to improved service delivery so that Ethiopians now and in the future have reliable, efficient and high-quality telecommunications services leading to a better quality of life. On a national level, opening up Ethiopia’s telecommunications sector to competition and private sector participation will enable us to unlock the transformational power of the digital economy, creating jobs and paving the way for digital services in areas such as health, education and finance.
The first license has been awarded to the Global Partnership for Ethiopia - a private international consortium of telecommunications giants led by Kenya's Safaricom in partnership with Vodacom Group (South Africa), Vodafone Group (UK), Sumitomo Corporation (Japan), CDC Group (UK). See announcement of the winning bid here The launch of another tender process is currently under consideration for the second license.
The Global Partnership for Ethiopia will now play an important role in the most ambitious growth phase of our economy, aiming to start providing telecommunications services from 2022, and investing USD8.5 billion over the next decade. here The launch of another tender process is currently under consideration for the second license.
Liberalization of Ethiopia’s telecoms sector is part of the government’s 2019 Home Grown Economic Reform Agenda (“2019 Reform Agenda”), which highlights the role of the private sector in driving sustained growth and creating jobs. Addressing the bottlenecks related to productivity, quality and competitiveness is critical to enable the private sector to fully utilize opportunities available for sustainable development and transformation. Expansion of Information and Communication Technology (“ICT”) infrastructure across the nation is also specified in the 2019 Reform Agenda as one of the goals of digital transformation and it is particularly important to ensure telecommunications infrastructure and services are distributed fairly and are accessible to all. Reform of the telecoms sector is key to ensuring universal access. The focus on transforming to a digital economy is designed to bring improvements in productivity, efficiency, transparency, and accountability. On 17 June 2020, the Council of Ministers approved the Digital Transformation Strategy, which is aligned with the 2019 Reform Agenda. Central to a digital economy is a world class telecommunications service. The process of planning for the issuance of the new licenses has been the ECA’s focus since inception. Between 22 October 2019 and 22 November 2019, the ECA held a public consultation on the new regulatory framework which yielded helpful contributions to the ECA’s efforts to issue several draft directives that aim to guide the regulatory process and ensure that telecommunications services are provided to the people of Ethiopia in a manner consistent with the objectives of the CSP. The directives, issued for stakeholder consultation in both English and Amharic languages, elicited helpful comments both from stakeholders and the public that guided in the formulation of the final draft directives. The ECA recognized from the start the paramount importance of establishing a clear, consistent, fair and transparent regulatory environment for the success of the liberalization reforms. In May 2020, the ECA invited companies to submit their Expressions of Interest (EOI) to take part in this process. We received twelve EOIs, nine from telecoms operators, two from non-telecoms operators and one incomplete submission. The next step was to publish the Request for Proposals (RFP) where interested and qualified companies could submit their technical and financial bids. We issued the RFP on 27 November 2020 and made a public announcement, the details of which are available in the HYPERLINK "https://eca.et/news/" news section of our website. By the deadline of April 26th 2021, two complete proposals had been successfully submitted. Following a rigorous evaluation of the offers, and in line with the rules laid out in the RFP, one license application made by the Global Partnership for Ethiopia was accepted, while the second proposal was rejected. The launch of another tender process for the second license is currently under consideration.
How will more competition in the telecoms sector benefit me as a consumer and the country in general?
Opening up the sector to competition has many benefits for consumers. These will include faster, more reliable data and phone services, with better reach across the country than is currently available. With a new telecoms operator (the Global Partnership for Ethiopia) aiming to start providing telecommunications services from 2022 alongside Ethio Telecom, citizens and businesses will have more choice over which company offers them the best service for their particular needs. Improved connectivity will mean consumers are better placed to benefit from the huge opportunities presented by the digital economy. Improved connectivity and developing ICT usage can increase the efficiency and effectiveness of government and public services, including better governance practices and efficient use of resources. Additional benefits include: More control over personal finances through digital banking and digital payments Improved healthcare with more health education available online and doctor patient consultations possible over the internet or mobile phone; improved access to health services, especially in less populated areas, by enabling the use of micro-health coverage for emergency services Better access to quality education with learning and materials accessible online via phone or computer Broader consumer choice for goods and services and more convenient shopping experiences and options such as food delivery and movie streaming Expanding digital financial inclusion services to low-income households will help reduce poverty, in giving opportunities to women and young people, and increasing their participation in the economy by inducing a saving culture. Better sharing of information brought about by improved connectivity can also help to develop small and micro enterprises Increased use of ICT can also assist in the expansion of clean energy investments, reducing air pollution All of these developments and more will lead to the creation of significant employment opportunities in the digital economy.
Faster, more reliable connectivity will provide a significant boost to sectors such as manufacturing, tourism, agribusiness, e-commerce and the start-up ecosystem. Businesses will be able to develop their business models faster and operate more efficiently, providing a wealth of employment opportunities as these sectors grow. Reliable and accessible communications will attract both local and inward investment, creating further employment. Additional benefits to businesses include: More flexible working practices possible for staff, allowing firms to attract the best talent from across the country Farmers and agribusiness will be able to access vital real-time information such as livestock tracing, weather data and commodity pricing improving productivity Farmers will have better access to online loan services for the purchase of fertilizers and seeds; digital micro-insurance; as well as income saving and market information Entrepreneurs and small and medium-sized businesses will be able to reach new customers via online platforms and convert sales more easily with digital payments Construction and manufacturing companies will have access to real time project management software ensuring projects and processes are run more efficiently Global companies reliant on internet connectivity (such as GPS-operated taxi services, movie streaming, online music and food delivery) will enter the local market, creating new jobs and stimulating local investment.
Opening up the telecoms market will enable our citizens and businesses to be fully involved in the array of opportunities that a well-functioning digital economy provides, and this is why we have invited participation from experienced international telecommunications companies to offer their expertise and services alongside that of Ethio Telecom. This critical undertaking is about offering more choice to consumers and businesses; healthy competition helps to develop markets, bringing with it economic and social advantages along with new jobs. As stated above, the ECA has developed a legal and regulatory framework that aims to ensure that principles such as fair competition, consumer protection, and universal access are upheld in the public interest. The policies will, among other things, ensure that Ethio Telecom’s infrastructure can be shared on fair and reasonable commercial terms. Also it is expected that the new operators (the Global Partnership for Ethiopia) alongside building their own infrastructure will enter into infrastructure and facilities sharing arrangements with each other in order to deploy their network coverage quickly and in a cost-efficient way.
Are you bringing in the Global Partnership for Ethiopia as part of the partial privatization of Ethio Telecom?
No, any new licensees will not get involved in Ethio Telecom’s partial privatization. Privatization is not within the ECA’s mandate; the responsibility assigned to the ECA in the Proclamation is to oversee the liberalization and licensing process. Through its mandate to boost competition in the sector (in order to provide a better telecommunications service to the people of Ethiopia), the ECA was seeking two telecom business operators with proven expertise to improve the quality of service and to invest in telecommunications infrastructure and services. As stated in other sections of this FAQ, by the conclusion of the liberalization process there will be three telecommunications operators in Ethiopia: the incumbent operator Ethio Telecom, along with two new, full-service license holders. One license has been awarded to the Global Partnership for Ethiopia (announced on 22 May – click to see HYPERLINK "https://eca.et/2021/05/22/press-release-telecommunications-service-operator-license-award/" press release), and the launch of another tender process for the second license is currently under consideration.
The winner of the telecommunications license was announced on 22 May, and the new operating company aims to start providing telecoms services from 2022. The specifics of rolling out services will be guided by Universal Access and Service Framework. The new license holder (the Global Partnership for Ethiopia) will be expected to rollout services in dense urban, urban and suburban areas, where just under a quarter of our population lives, within the first year of operation. Services in rural areas are required to be rolled out over the four years that follow. The licenses will be for a 15-year period with the prospect of renewal if all terms and conditions are met.
The Ethiopian Communications Authority (ECA) was established on August 12, 2019 through the Communications Service Proclamation No. 1148/2019 (the “CSP” or “Proclamation”) as an independent federal government regulatory authority. The Proclamation mandates the ECA to regulate the telecommunications sector as well as promote: the development of high quality, efficient, reliable and affordable communications services throughout the nation; a competitive market for the achievement of these goals; both accessibility and the interests of consumers. Therefore, the ECA is the entity mandated to award the two new, full-service licenses through a competitive licensing process. The first license was awarded on 22 May 2021, and the launch of another tender process for the second license is currently under consideration. The ECA has appointed and is being advised by a highly experienced team of experts led by the International Finance Corporation (IFC), a member of the World Bank Group, to support the ECA through the process of issuing the new licenses. The independence of the ECA will be guaranteed through the exercise of the powers given to it under the Proclamation.
The new licenses must be awarded to qualified telecom operators selected through a competitive bidding process according to the Tender Regulations, Technical and Financial criteria. The RFP was published on 27 November 2020, inviting telecom operators to submit proposals (bids) to take part in Ethiopia’s telecom market, and the submission process was closed on 26 April 2021. In responding to the RFP, each bidder had to comply with strict technical qualification criteria to demonstrate the company had the technical expertise required to manage a license of this size in Ethiopia, in addition to strict financial qualification criteria to show it had the resources to manage a license of this scale. By the deadline of April 26th 2021, two complete proposals had been successfully submitted. Following a rigorous evaluation of the offers, and in line with the rules laid out in the RFP, one license application made by the Global Partnership for Ethiopia was accepted, while the second proposal was rejected. The launch of another tender process for the second license in due course is currently under consideration.
Yes, from the start the ECA recognized the paramount importance of establishing a clear, consistent, fair and transparent regulatory environment for the success of the liberalization reforms. Bids submitted were evaluated in accordance with the tender regulations, and technical and financial criteria set out in the RFP. The bidding process was fully competitive, and the management and selection process was transparent.
What will the Government do to ensure access of communication services to all including rural coverage?
The purpose of the liberalization is to encourage healthy competition in this sector, and this is expected to drive down costs to the consumer. We know our citizens are also unhappy with the reliability and quality of service they currently receive. It is critical to make sure that more Ethiopians have access to faster, more reliable, accessible data and phone services and that is why we are bringing in strategic partners for growth, with extensive experience in this area. The ECA has responsibility for economic regulation under the Proclamation and this includes Universal Access of communication services to all. The Authority has the power to develop annual objectives for Universal Access to communication services in Ethiopia. This is to enable the largest number of users to have access to telecommunications services, particularly in rural and remote areas of Ethiopia and there is a Universal Access Fund established by the Proclamation that will be used to support universal access to Communication Services in Ethiopia.
The International Finance Corporation (IFC), member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets, has been engaged to advise the ECA throughout this transaction. IFC is highly experienced in bringing together the right experts for a process of this magnitude and has identified and brought onboard the necessary economic, technical, legal, tax and other expertise.
How is the Covid-19 pandemic affecting the issuance of the new licenses and is now the right time to be doing this?
Yes, this is still the right time. Covid-19 is not only a global health emergency, but it is also causing a devastating impact on economies around the world, with governments and businesses of all sizes having to make drastic changes to adapt to the rapidly evolving situation. The priority of our government includes battling the virus by saving lives, supporting the nation’s health workers, and containing the spread of the virus through testing, isolation, and promoting precautionary measures throughout the nation. The priority, rightly, of the winning bidder of the first license to be issued (the Global Partnership for Ethiopia), is to focus on ensuring the safety and wellbeing of their own employees and in steering their company through these unprecedented times. The ECA is well positioned to manage this process in a transparent and fair manner and we have continued working alongside our team of specialist advisors, doing all that is required to prepare the groundwork for a successful licensing round in these unprecedented times. Effective telecommunications have a vital role to play in disaster and risk management as well as in unlocking the transformational power of the digital economy. Information technology is needed to deliver early warnings and regular public health information updates to citizens, and telecommunications networks to allow for the fast and smooth management of emergency communications. A reliable and accessible telecommunications network would provide tools and technology to assist our health workers in performing their vital duties. We could also keep our healthcare providers safe by enabling more people to work from home and help millions of students to continue their studies through online learning platforms. Introducing competition to the sector has never been more important than the current moment. Effective telecommunications are also core to the recovery of the economy post pandemic and in driving the planned digital transformation forward.