ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Telecommunication

Sumitomo teams with Vodafone to win Ethiopia telecom project

Cellular bid marks first foray into Africa by Japanese company

Ethiopia's telecommunications sector has been dominated by state-run Ethio Telecom.   © Reuters

TOKYO -- Sumitomo Corp. will offer mobile services in Ethiopia as part of a consortium with British telecom provider Vodafone Group, becoming the first Japanese company to enter the market in Africa.

Ethiopia approved a license for the consortium to provide mobile services in the country. The grouping, which also includes British development finance specialist CDC Group, will establish a joint venture. Sumitomo is expected to hold a stake of slightly less than 30%.

Outlays are projected to top $8 billion over 10 years, including capital investment for base stations. Services are expected to start in 2022. The Japanese government is supporting the initiative, with the U.S. International Development Finance Corp. likely to provide financing as well.

Africa's telecommunications infrastructure contains a high percentage of Chinese equipment -- from the likes of Huawei Technologies and ZTE -- which has been cited for potential security risks. Japan, the U.S. and the U.K., concerned that the trend would continue, approached Ethiopia about the consortium's participation.

State-run Ethio Telecom has dominated the sector in Ethiopia. The partial privatization of the company began in 2019, with the government deciding to open the wireless sector to competition. Bids were solicited the following year, and the window closed last month.

Plans called for granting licenses to as many as two entrants, and other companies made bids. But only the U.K.-Japan consortium was selected.

The Ethiopian Communications Authority granted the nationwide telecom license to the U.K.-Japan consortium. (Photo from Ethiopian Prime Minister Abiy Ahmed's Twitter post)

"This will be the single largest FDI [foreign direct investment] into Ethiopia to date," Ethiopian Prime Minister Abiy Ahmed said in a tweet.

Ethiopia is among Africa's largest countries, with 112 million people. As penetration of mobile phones in the nation has reached only about 40%, the consortium sees opportunity for growth.

The selection also represents the first project under Sumitomo and Vodafone's strategic partnership reached in November. In addition to cellular service, the group plans to roll out offerings in areas such as digital money, education and medical IT.

China has sought to establish a digital Silk Road, based on its own internet network, as part of Beijing's broader Belt and Road infrastructure initiative. Among overseas projects undertaken by Chinese companies from 2006 through June 2020, nearly 40% have been in sub-Saharan Africa, according to Mizuho Research & Technologies.

"Huawei is handling 70% of Africa's 4G network," said Yoshino Tamai at Mizuho Research.

The selection of the Vodafone-Sumitomo consortium increases the likelihood that equipment from Japanese companies such as NEC and Fujitsu will be used.

"We will also be able to provide insight from the privatization of [Nippon Telegraph & Telephone]," a Japanese government official said, referring to the country's telecom giant, which previously was fully state-owned.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more