Orange not getting into Ethiopia...or its own way in Belgium

Ethiopia has shared the names of just two bidding groups for its two available telecoms licences, a disappointing outcome from one of the world's last great liberalisation opportunities.

Mary Lennighan

April 27, 2021

3 Min Read
Orange not getting into Ethiopia...or its own way in Belgium

Ethiopia has shared the names of just two bidding groups for its two available telecoms licences, a disappointing outcome from one of the world’s last great liberalisation opportunities.

The deadline – pushed back from March – for submissions for the licences expired on Monday, at which point the Ethiopian Communications Authority (ECA) talked up the response it has received, particularly from African telecoms companies.

“We are delighted to have had interest from established telecoms operators from around the world, commensurate with this unprecedented opportunity, including from Africa’s two telecommunications ‘giants’, MTN – the largest mobile operator on the continent, and the Vodafone/Vodacom consortium, including Kenya’s largest telecoms provider, Safaricom,” the ECA said in a statement.

The telcos themselves later confirmed that the Vodafone/Vodacom.Safaricom grouping will also include CDC Group and Suitomo Corporation, while MTN said it is bidding alongside equity partners including China’s Silk Road Fund; it said it will disclose the identities of the other partners should its bid prove successful.

The ECA said it will evaluate the bids based on technical and financial criteria, but did not give a timeframe for selecting the winning licensees.

The global telcos interested in the Ethiopia liberalisation included France’s Orange, which ultimately did not submit an offer. Company executives were cagey on the telco’s plans at its results call last week, when CFO Ramon Fernandez said “let’s see” in response to a direct question on Ethiopia. “The process is ongoing,” Fernandez said, adding that if the conditions for market entry are not good enough then Orange will not go.

This might not be the end of the road to Ethiopia for Orange though. The market liberalisation process also includes the sale of a 45% stake in incumbent operator Ethio Telecom and there have been hints that this could be a way in for Orange.

“It seems companies like Orange and Etisalat are more interested in buying a stake in Ethio Telecom,” Reuters quoted Brook Taye, a senior advisor at Ethiopia’s finance ministry, as saying.

Of course, this could just be bravado on Taye’s part, but there is one good reason why it could be the case: mobile money.

The two new licences up for grabs will allow the winners to offer a full portfolio of telecoms services, but not mobile financial services. Meanwhile, Ethio Telecom has previously announced plans to offer mobile money transfer services, Reuters said. Given Orange’s experience in this field, it is not inconceivable that the desire to extend its mobile money and banking services would lead it to consider such a move.

Speaking of money, Orange has found itself in something of an awkward situation in Belgium.

Having had to fight its corner over its €22-per-share buyout offer to minority shareholders of Orange Belgium after one such holder – Polygon Global Partners – publicly accused it of undervaluing the asset, Orange on Tuesday admitted that it had secured fewer than half of the shares it sought during the offer period that closed last week. Shareholders representing 21.66% of Orange Belgium’s share capital took up the offer and tendered their shares, the telco said. It had been aiming to pick up a stake of 46.1% to give it sole ownership and delist the unit.

As a result, Orange has reopened the tender, giving minorities until 4 May to sell their shares, still at the initial €22 price. But it knows it will not reach the 95% level it needs to launch a squeeze-out bid because Polygon, which holds 5.29% is adamant it will not tender its shares, reiterating that in its view Orange’s offer is derisory.

“As Orange Belgium continues to execute on its business plan, Polygon believes that other minority shareholders will similarly resist tendering their shares at the current offer price,” it said.

About the Author

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

test new title

See more
Subscribe and receive the latest news from the industry.
Join 56,000+ members. Yes it's completely free.

You May Also Like