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Ethiopian Government Selling a 40% Stake in Ethio Telecom

Ethiopian Government Selling a 40% Stake in Ethio Telecom

Image sourced from Africanews.

The Ethiopian government has announced a new tender process to begin the sale of a 40% stake in the state-owned telecommunications company, Ethio Telecom.

The sale is still in its very early stages with the selection of a successful bidder expected only at the end of a significantly lengthy process.

According to reports, the government plans to retain a 55% stake in the operator while the remaining 5% will be offered to domestic investors through an initial public offering.

This new proposed sale of a large minority stake in the telecom comes as part of the Ethiopian government’s plan to liberalise the country’s monopoly in its telecom sector. Another key piece of the plan is for two foreign carriers to be granted licenses to operate in the vast, nearly-untapped market.

“The government wants state-owned enterprises to be competitive and productive, the authorities’ motivation for selling a part of Ethio Telecom to private operators,” Deputy Director of Public Enterprises, Holding and Administration Agency, Zinabu Yirga, is quoted by Tech Cabal from a press conference in the capital Addis Ababa on Monday.

“As part of the broader opening up of the sector, Ethiopia is also moving to license private operators to compete with Ethio Telecom.”

Investors Line Up for Ethiopian Telecoms Market

Brook Taye, a senior advisor at Ethiopia’s finance ministry, says that the 40% stake in Ethio Telecom will be sold as a singular stake to a sole investor. As of yet, it is unclear how much the stake will be worth, but the news should attract massive investors from across Africa, and internationally.

Investors are drawn towards the country due to Ethiopia’s generally fallow telecoms market. In a population of over 100 million people, only about 20% have access to the Internet, less than 40% have a mobile phone and only 5.8% of the people use social media, according to a report from DataReportal.

Ethiopia’s liberalisation plan, first announced in 2019 and driven by Prime Minister Abiy Ahmed, has seen several significant delays en route to realisation.

Most notably an internal political crisis in the country’s Tigray region, and of course, the worldwide COVID-19 pandemic.

The plan has since been ramping up in the last six months, with Safaricom-led consortium Global Partnership for Ethiopia winning one of two available private operating licenses meant to break up Ethio Telecom’s monopoly in the sector.

The consortium was announced the winner after a successful bid of around $850-million. Meanwhile, a second offer of around $600-million from South Africa’s MTN Group was deemed too low by the government’s regulator. MTN is now preparing to offer the country a second bid.

By Luis Monzon
Follow Luis Monzon on Twitter
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