U.S. Sanctions Complicate Vodafone Funding for Ethiopia EntryBy Samuel Gebre and Loni Prinsloo
Consortium secured fianance from U.S. state development agency
DFC pausing Ethiopia investments on U.S. move over Tigray war
Vodafone Group Plc’s (bloomberg)—plans to expand in Ethiopia have been complicated by the U.S. state development agency’s decision to pause investments in the country, according to people familiar with the matter.
A group including the U.K.’s Vodafone, Safaricom Ltd. and Vodacom Group Ltd. were awarded a new mobile-phone license by the Ethiopian government on Saturday, and had agreed to take a $500 million loan from the U.S. International Development Finance Corporation to help with acquisition and development costs.
That part of the financing has been thrown into doubt over U.S. economic sanctions against Ethiopia to end violence in the northern Tigray region, a conflict that has killed thousands of people and displaced many more. The state goup is awaiting direction from the Joe Biden administration about how it should react in the longer term, said the people, who asked not to be identified as the information isn’t public.
Should that cash be permanently withdrawn by the DFC, the telecom companies will have to source the cash elsewhere and at greater cost, the people said. However, there’s no indication the license award is in jeopardy, they said, and the group expects to start services in 2022.
Vodafone declined to comment, while Vodacom and Safaricom didn’t immediately respond to requests for comment. The DFC didn’t respond to emails seeking comment.
Another partnership led by MTN Group Ltd., Vodacom’s Johannesburg rival, and the Silk Road Fund, a Chinese state investment group, was turned down after bidding $600 million. Ethiopia still intends to sell two licenses, and said it will invite a new round of offers from international carriers after some policy adjustments.
The government is also looking to sell a minority stake in Ethio Telecom, the state monopoly.