On May 22, the Ethiopian government through Ethiopia Communication Authority awarded a full telecommunication license to Global Partnership for Ethiopia.
The group includes Safaricom PLC, Vodacom Group Ltd (South Africa) through its subsidiary Vodacom International Holding, Vodafone Group PLC through its subsidiary Vodafone International Operation Limited, CDC Group PLC, and Sumitomo Corporation.
The group now paid $850M for license and committed to an $8.5 B investment. According to Brook Taye, Senior advisor to the Ethiopian MoF 1.5 million jobs are expected to be created.
Below, we looked at some key details we know so far about that consortium that won the bid after.
License Details
The license Consortium won does not include the right to operate mobile money. The license is for 15 years. However, the group has a right to apply for another 15 more years.
Legal Structure
The legal structure is going to be involving setting up companies in UK, Kenya, Netherlands & Ethiopia.
Safaricom has already formed an SPV ( Special Purpose Vehicle ) called Vodafamily Ethiopia Holding Limited which is a limited liability company incorporated in England and owned 90% by Safaricom, 10% by Vodacom limited, and 1 share by Vodafone international operations limited. After regulatory approvals, the SPV is expected to move to Kenya under the name of SafaricomFamily Ethiopia Holding company.
The Special Purpose Vehicle will hold a 61.9 percent stake in the Global Partnership for Ethiopia (GPE) which is set up in the Netherlands. Sumitomo Corporation and CDC group will own 27.2% and 10.9% respectively. Safaricom CEO has told Bussines Daily Africa that “One of the reasons we have structured the investment vehicle the way we have through the Netherlands is that the Netherlands has a Bilateral Investment Treaty with Ethiopia. One of the things such a treaty helps you with is managing some of the broader risks that you may face as an investor.”
In the end, the Global Partnership of Ethiopia ( GPE) will then own the newly incorporated operating company in Ethiopia. The name of the Ethiopian operating company is not yet known. Here is a visual of the legal structure that is pursued by the consortium.
Ultimately, the shareholding of the Ethiopia operation by consortium members will be lead by Safaricom who will control 55.7%. Vodacom will have 6.2%, Sumitomo Corporation will have 27.2% and the CDC group will have a 10.9% share.
Operation
The consortium is now proceeding to set up the operating company in Ethiopia. The Telecommunication license will be issued to the operating company that will be set up in Ethiopia. The operations in Ethiopia will start in 2022. Accordingly, the consortium has deposited the $850 M license fee that is expected to wired within the 14 days of the license award.
Advisors
The team who helped Safaricom on the bidding includes Stanbic Holdings Plc as an Investment Bank advisor, Bowmans as a legal advisor from Kenya, and DLA Piper and Norton Rose Fullbright as an International legal advisor.
Aman Assefa & Associates Law Office which is an alliance of Bowmans was also an advisor for the Vodafone consortium in Ethiopia.
The source for the key details provided above is a public announcement made by Safaricom PLC with the approval of the Capital Authority of Kenya.
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