Telecom developers opted out of the race for the two operational licenses in Ethiopia as the government remains firm in its position to close the mobile banking and telecom tower markets to foreign companies.

MTN Group, partnering with the Chinese Silk Road Fund, and the Global Partnership for Ethiopia, a consortium comprising Vodafone, Safaricom, Vodacom South Africa, CDC Group Plc and Sumitomo Corp, were the only two contenders announced to have submitted bids by the deadline last week. The consortium has received funding of half a billion dollars from the US International Development & Finance Corporation.

The telecom liberalisation process was initiated in 2018 with Prime Minister Abiy Ahmed (PhD) pledging his administration's commitment to the cause. A year later. the Ethiopian Communication Authority (ECA) was established in to facilitate the process. In May last year, the government called for international operators to submit their expressions of interest. A dozen operators, including Orange, Etisalat Telecom, Liquid Telecom, Axian, MTN, Saudi Telecom, responded to the invitation.

The decision was a significant step to ending a monopoly of over a century by the state-owned Ethio telecom, which had 44 million subscribers by the end of last year, even though it was undermined by the partial closure of the sector to foreign competition in the areas of mobile banking and telecom towers.

Telecom developers, which first showed interest to participate in the bid, along with officials of the World Bank, have been pleading for the full liberalisation of the mobile money market and the licensing of foreign tower companies, a proposal which was rejected by the Ministry of Finance.

Brook Taye (PhD), a senior advisor to the Ministry, explains that the potential bidders who dropped out of the race put forth three major reasons for doing so. Some expressed their interest in purchasing shares from Ethio telecom when 40pc of its share is floated, others were concerned mobile service provision is off-limits for foreign operators, while some were interested in bringing in a third-party tower builder, according to him he told Fortune.

The 2020 directive issued by the National Bank of Ethiopia, regarding mobile money operators, allows non-financial institutions to take part but limits the services to Ethiopians and foreigners of Ethiopian origin only, enabling the state giant Ethio telecom to provide mobile money services.

The Vodacom consortium, however, was not phased by the fact. Its officials are interested in providing the service and are hopeful that the government will look to liberalise digital financial services as well.

"Once the telecom licensing is completed, we have no doubt that they'll continue their work on the liberalisation of digital financial services," an official from the Vodacom consortium who wished to remain anonymous told Fortune.

Despite the optimism of the bidding company, however, experts think that the decision to bar foreign operators is the right one. Nebiat Tekle, a digital banking expert, believes that local competition should be fostered and local investors should have a strong standing before foreign operators come in.

"Then it will rely on the survival of the fittest," Nebiat said.

He added that liberalising the sector while the banking sector is closed down would be unfair.

Abdulmenan Mohammed, a financial statement analyst, concurs, saying that the mobile money and the telecom network provision issues should be seen from different angles.

"When the financial sector is opened to foreign investment, mobile money will probably become part of it," he said.