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European Commission block on Vodafone entry into Ethiopia lifted


Frees Kenya's largest telco Safaricom to start operations in the market of over 100 million people

The European Commission (EC) has cleared a joint venture between Safaricom and its parent firm Vodafone for Ethiopia entry after initially announcing plans to scrutinise it over competition concerns, reports The East African. A letter seen by The Business Daily, says that the EC sees no threat to fair competition from the consortium.

This clears Vodafone to enter the Ethiopian mobile market with its partners, a Safaricom-led consortium including British development finance agency CDC Group and Japan's Sumitomo Corporation. In July Sumitomo was granted a telecoms operator licence for Ethiopia after it incorporated a local company.

Firms operating within the EU require mandatory clearance from the bloc's watchdog for activities including business acquisition and even setting joint ventures in other markets they operate in, outside the EU.

US loans delayed by instability fears

Safaricom's plans to expand to Ethiopia were also complicated by a US State financier threatening to recall its loans following escalation of armed conflict in the Horn of Africa nation. The US International Development Finance Corporation (DFC) says that the acts of violence against civilians in Ethiopia's Tigray region could affect the release of $500 million loan to the consortium led by Safaricom.

The Safaricom consortium had agreed to take the $500 million from DFC to help with acquisition and development costs. "The board approval signified initial DFC willingness to consider a loan to the consortium in the event it wins a licence but does not obligate DFC to move forward with the transaction," the US State development agency told the Business Daily.

The financing had earlier been thrown into doubt over US economic sanctions against Ethiopia related to the conflict in the northern Tigray region, which has killed thousands of people and displaced many more.

These clearances mean Kenya's largest telco can start operations in an addressable market of 100 million people. The inward investment will also create a number of jobs in Ethiopia.

Now Safaricom is gearing up for Ethiopia commercial launch with a recruitment drive. By June next year, the company aims to build a team of 1,000 employees, Safaricom Ethiopia MD Anwar Soussa told a press briefing in Addis Ababa.