Ethiopia is planning to sell a 10% stake of its state-owned telecoms company, Ethio Telecom, on a local stock exchange that will be launched this year. Prime Minister Abiy Ahmed announced the decision on Tuesday, as part of his efforts to liberalize the economy and attract foreign investment.
A Historic Move for Ethiopia’s Economy
Ethio Telecom is one of the largest telecoms operators in Africa, with more than 50 million subscribers and a revenue of $1.65 billion in 2023. The company has been a monopoly in the sector until last year, when a consortium led by Kenya’s Safaricom won the country’s first private telecoms licence and started commercial operations in 2022.
The sale of 10% of Ethio Telecom’s shares to the public is a historic move for Ethiopia, which has never had a stock market before. The government hopes that the new capital market will help mobilize domestic savings, diversify the economy, and create jobs. Abiy said the stock exchange will be “a game-changer, supporting Ethiopia in achieving its growth aspirations and attracting new capital”.
Challenges and Opportunities Ahead
The plan to sell Ethio Telecom’s shares comes after the withdrawal of French telecoms firm Orange, which had expressed interest in buying a 45% stake in the company but decided to pull out in November 2023. Orange cited the security situation, the regulatory framework, and the valuation of the company as reasons for its decision.
Ethiopia has been facing recurrent security problems, especially in the northern Tigray region, where a conflict between the federal government and a rebel group has displaced millions of people and disrupted telecoms services. The country is also preparing for national elections in June 2024, which could pose further challenges for the stability and reform agenda of Abiy’s administration.
However, despite the difficulties, Ethiopia still offers a huge potential for investors, as it has one of the fastest-growing economies and populations in Africa. The telecoms sector is especially attractive, as it has a low penetration rate and a high demand for mobile and internet services. The government has also pledged to create a level playing field for the private operators and to improve the infrastructure and quality of the network.
A Bright Future for Ethio Telecom and Ethiopia
Ethio Telecom’s CEO, Frehiwot Tamiru, said the company is ready to face the competition and to offer better products and services to its customers. She said the company has invested in upgrading its technology, expanding its coverage, and launching new services, such as mobile money and 5G. She also said the company is committed to contributing to the social and economic development of Ethiopia.
The sale of Ethio Telecom’s shares is expected to take place in the second half of 2024, after the stock exchange is operational and the valuation of the company is completed. The government will retain a 45% stake in the company, while the remaining 45% will be sold to strategic investors in the future. The government hopes that the partial privatization of Ethio Telecom will not only boost its revenue and performance, but also set an example for other state-owned enterprises that are slated for reform.
Ethiopia is on the verge of a historic transformation of its economy and society, and Ethio Telecom is at the forefront of this change. By opening up its telecoms sector to the public and the private sector, Ethiopia is creating new opportunities for growth, innovation, and inclusion. The future looks bright for Ethio Telecom and Ethiopia.
Source: ReutersÂ
