Fortune News | Sep 11,2020
The Ethiopian Communications Authority (ECA) has decided not to let a fourth operator enter the telecommunications sector for at least 10 years. The two new joining companies, which are expected to enter the telecommunications industry soon, will receive a 15-year operator license, enabling them to provide combined services for mobile, internet and fixed-line.
The long-awaited request for proposal (RFP), which was launched at the end of last week, guarantees that the two operators will only have to compete against each other and the incumbent Ethio telecom. With the liberalisation plan, the country will follow a ''2+1 approach,'' in which two operators along with the state enterprise provide full telecom services.
"During the consultation meetings we had with prospective bidders," said Brook Taye (PhD), a senior advisor at the Ministry of Finance, "they requested three to five years of a grace period."
However, the market dynamics study conducted by the Ministry and the Authority revealed that the market could handle three operators for a decade, according to Brook.
"With fair and equitable profit," said Brook, "the market can absorb three companies for 10 years."
While granting the companies a grace period, the government expects them to fulfill the stipulated requirements, including covering 98pc of the population with voice call and text message services within five years.
"Failing to comply with the requirement results in a sanction," said Brook.
Floated on November 27, the bid will stay open for 90 days. To receive the bid documents, the prospective bidders need first to send in a letter stating their intent to take part in the bidding process by December 10, 2020. After depositing 15,000 dollars into a bank account opened at the National Bank of Ethiopia, the bidders will receive the RFP document in a soft copy, and they will be made to sign a non-disclosure agreement subsequently.
The bid document has three parts: detailed information about the country's market prospects; tender requirements, including what is expected from the operators; and license details, which define the terms in the contract. The RFP also explicitly lays down the targeted quality, population and geographic coverages.
In the document, the Authority has already prepared operator codes, a unique number assigned to telecommunications operators. Ethio telecom will hold the existing mobile network code 09, while the two new operators will receive 07 and 08 mobile network codes. Numbering allocations for fixed lines will also be made to the companies across the country, which is divided into nine telecom regions. The frequency will also be designated for the bidder, such as the range of bandwidth that will be availed for each operator.
For the expression of interest that was launched in May, Global Partnership for Ethiopia, a consortium of Vodafone, Vodacom and Safaricom; Etisalat; Axian; MTN; Orange; Saudi Telecom Company; Telkom SA; Liquid Telecom; and Snail Mobile have shown interest. Kandu Global Telecommunications and Electromecha International Projects, the two non-telecom operators, also expressed their intent to enter the Ethiopian market.
December 25 is set as the deadline for the reception of questions and suggestions from interested bidders on the RFP. Twenty days later, the Ministry and the ECA will give provisional answers to the questions and inquiries raised by the bidders. The final version of the RFP, which will incorporate comments from the bidders, will be launched on January 29 with a final bid submission date of March 5, 2021.
The bid will be opened an hour after [the submission window] is closed, according to Balcha Reba, director-general of the Authority.
"The evaluation committee will wait readily to jump into the evaluation," Balcha said.
Technically, the evaluation will be conducted by a hybrid bidding model, according to Eyob Tekalign (PhD), state minister for Finance.
"We'll use selection criteria that combines both qualitative and quantitative measurement," Eyob told Fortune.
Hybrid, beauty contest, and full auction were the three options proposed to be used to pick the two new telecom operators.
The process of opening the telecom industry to foreign operators has taken almost two years. The time was spent on drafting a communications services proclamation; restructuring the Ethiopian Communications Authority and preparing 16 directives; a regulation; and a framework. The Authority has prepared the RFP and the marketing strategy alongside the International Finance Corporation (IFC), the transaction advisor.
"In the coming 90 days," said Brook, "we'll end up having a very competitive process. And hopefully, we'll receive a very competitive bid that will result in a more dynamic communications services sector in Ethiopia."
The evaluation team aims to complete the selection process and announce the winners in a period of less than a month from the bid closing date.
The way the bid document outlines the technical and financial requirements is very objective and easy to measure, according to Brook.
"We expected to announce the winners in March," said Brook.
PUBLISHED ON Nov 29,2020 [ VOL 21 , NO 1074]
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