The European Commission (EC) has approved a joint venture between Safaricom and its parent company Vodafone to enter Ethiopia after initially announcing plans to examine competition concerns.
In a letter from Business Daily , the Commission said the consortium did not pose a threat to fair competition.
The clearance now paves the way for Vodafone to join its partners in Ethiopia.
The consortium led by Safaricom, which also includes the UK development finance agency CDC Group and the Japanese Sumitomo Corporation, received a telecommunications operator license in Ethiopia in July of this year after a local company was established, thus paving the way for the inclusion of Kenya’s largest telecommunications company in the market with over 100 million people.
The EU competition watchdog had previously established notes that the Ethiopian JV entry transaction could fall within the scope of the Merger Regulation, which means it needs to be reviewed utiny.
“The Commission invites interested third parties to provide the Commission with their possible comments to submit to the proposed operation, “she had said.
Companies that operate within the EU require mandatory clearance from the Guardian of the Block for a range of activities, including acquiring other companies and starting up of joint ventures in other markets in which it operates.
Safaricom, which owns a majority stake in the consortium, announced last week that it was preparing to start trading in Ethiopia and announced a nationwide recruiting campaign an.
The company plans to build a team of 1,000 employees by June next year, said Anwar Soussa, Managing Director of Safaricom Ä Ethiopia, after a press conference with journalists in Addis Ababa.
However, Safaricom’s plans to expand into Ethiopia were hampered by a US state financer who threatened to cut its loans after the armed conflict on the Horn escalated from Africa.
The US International Development Corporation (DFC) says the acts of violence against civilians in the Ethiopian region of Tigray require the release of a $ 500 million loan to the Safaricom-led Consortium.
The Safaricom Consortium agreed to take over the $ 500 million from DFC to help with acquisition and development costs.
“Approval from the Board of Directors meant DFC’s initial willingness to consider a loan to the consortium if licensed, but it does not oblige DFC to move the transaction forward. ” the US state development agency previously told Business Daily in an email reply.
The funding was previously called into question due to US economic sanctions against Ethiopia in connection with the conflict in the northern Tigray region Thousands of people have been killed and many more displaced.