Thursday, 29 July 2021

Ethiopia readies sale of 40% of Ethio Telecom

by Harry Baldock, Total Telecom
Monday 14 June 21

The minority sale of the operator is a key feature of the liberalisation of the country’s telecoms sector, which will also see two foreign companies gain operating licences

Ethiopia’s Prime Minister Abiy Ahmed has been pushing to liberalise the country’s monopolistic telecoms sector for over a year now, facing numerous delays in the form of the coronavirus pandemic and internal strife in the Tigray region. Back in May, the Global Partnership for Ethiopia, a telco-consortium led by Safaricom, was announced as the winner of one of the two available operating licences being made available to break up Ethio Telecom&rsquo…

Ethiopia’s Prime Minister Abiy Ahmed has been pushing to liberalise the country’s monopolistic telecoms sector for over a year now, facing numerous delays in the form of the coronavirus pandemic and internal strife in the Tigray region.

Back in May, the Global Partnership for Ethiopia, a telco-consortium led by Safaricom, was announced as the winner of one of the two available operating licences being made available to break up Ethio Telecom’s monopoly on the sector. The successful bid was for around $850 million.

The second licence on offer, however, failed to sell, with the only other offer received being $600 million from South Africa’s MTN Group, which the regulator deemed two low. 

While many telcos from around the world, including the likes of Orange and Etisalat, showed initial interest in winning one of the two licences, most of these ultimately withdraw their interest following the announcement that the new market entrants would not be allowed to offer mobile money services.

As a result, the regulator is currently preparing to reauction the final licence. 

But beyond just two new players in the Ethiopian market, another key tenant of the sector’s liberalisation has been the sale of a minority stake in state-owned Ethio Telecom. 

Now, the sale of a 40% stake in the business has been announced, with potential investors having one month, starting tomorrow, to register their interest. According to sources, it seems that the stake will only be sold as a single stake to a single investor. 

Exactly how much such a stake would be worth is unclear, but investment is surely an exciting prospect. With a population of over 100 million people, the Ethiopian market is huge and has a great potential for rapid growth. Couple this with the arguably protectionist policies being applied to Ethio Telecom – such as being the only telco allowed to launch mobile money services in the country for at least a year – and you have a particularly lucrative proposition. 

Ethio Telecom in fact launch their mobile money service, Telebirr, back in May, recording that one million subscribers signed up for the service in its opening week.

Since December, Ethio Telecom has generated a revenue of around $600 million and has around 53 million subscribers. According to sources, the government’s plan is to retain a 55% stake in the operator, with 5% to be offered to domestic investors via an initial public offering.

 

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