In 2020, Ethiopia is set to split its telecoms monopoly and open the market to competition. The move will represent a rare opportunity for operators to enter a huge country with a large proportion of unconnected citizens and low data penetration rate.

The UN assessed Ethiopia’s population at 107 million in December 2018. GSMA Intelligence estimated the number of unique mobile subscribers was 35.4 million at the end of Q3 2019, with just 20.7 million of these data connections.

This presents a huge opportunity in providing connectivity and that’s before the addition of allied services such as mobile money.

Though the conditions attached to a mobile licence in Ethiopia remain unknown, operators have already been vocal on the potential of the market and, if the price is right, are making all the right noises.

Here, we assess some of the likely contenders and how Ethiopia would fit into their existing footprints.

Vodacom/Safaricom/Vodafone
Senior executives from Vodacom Group, Vodafone Group and Safaricom have been extremely enthusiastic about the opportunity in Ethiopia.

On a recent earnings call, Vodafone Group CEO Nick Read described Ethiopia as a “big growth opportunity”, citing the potential for both mobile communications and money services.

However, Read, who was regional CEO for Vodafone’s Africa and Asia Pacific operation for five years, noted the operator had previously abandoned bids to enter countries when the conditions were “not right”. Notably it withdrew from a bid for a licence in Myanmar in 2013.

Should the Vodafone family enter the race the most likely scenario would appear to be a joint bid from Kenya-based Safaricom and multinational group Vodacom.

Vodacom Group CEO Shameel Joosub has been extremely bullish on the opportunity and, Reuters reported, during Safaricom’s latest earnings call, acting CEO Michael Joseph confirmed a bid would likely be alongside Vodacom.

However, Joesph warned the cost for a licence alone could run into the “billion dollar range”.

MTN
South Africa headquartered MTN Group already operates in most of the largest markets in Africa including Nigeria, Ghana, Uganda, Zambia, Rwanda, South Sudan, Cameroon, Ivory Coast and its home market.

Alongside Vodacom, MTN chiefs have been the most vocal on the potential of Ethiopia. CEO Rob Shuter went on record to a number of media outlets earlier this year, describing the opportunity to enter the market as one it would be “excited” to participate in.

It also actively promoted its target of becoming a major player in the continent’s financial services sector, a plan which no doubt would include one of Africa’s most populous nations.

Recently the company has been much quieter on Ethiopia, but it would be a surprise if MTN was not one of the principal bidders to throw its hat onto the ring.

Orange
The majority of Orange’s footprint in Africa is in West and Central Africa and, although it doesn’t operate in any of Ethiopia’s neighbouring countries, its executives are bullish on the potential of the market.

At an event on its Middle East and Africa strategy held earlier this year, Orange deputy CEO Ramon Fernandez revealed the company’s CEO Stephane Richard and MEA regional boss Alioune Ndiaye visited authorities in the country to discuss a potential market entry.

Across its Africa operation Orange targets entry into adjacent sectors including energy and financial services, making a move in Ethiopia likely to be seen as part of a wider opportunity rather than simply about communications services.

Etisalat
Although Middle East-focused operator Etisalat sold its operation in neighbouring Sudan in 2016, it still operates in a number of African markets and was floated by local media as a potential bidder, though it issued no formal statements on a move.

Viettel
Vietnamese state-owned operator Viettel owns operators and shares in companies in a number of African markets. In 2018 Reuters reported the company was apparently interested in adding Ethiopia, but there have been no reports on its position since.

Someone else?
In addition to those above, given the position of their other operations in Africa, a move from either Airtel Africa or Zain Group would not be a complete surprise. However, neither has made any formal statements of intent and local media reports have not indicated a move is likely.

From noises coming out of Ethiopia, it would appear regulators are keen to attract interest from established telecoms players, though this does not necessarily mean only those with an existing African business.

A bid from a newcomer or business with assets in other sectors in the country cannot be completely ruled out. This may end up taking the form of a JV with an operator which, should the cost of entry be viewed as too risky, could be a way to limit exposure to what is essentially an unproven market with a relatively new regulator in place.

With 2020 fast approaching, we will soon find out the exact terms and cost of entry proposed by the recently formed Ethiopia Communications Authority, which could mean a rush to enter the market or companies swiftly ruling it out.

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.