Ethiopia to sell 40% stake in Ethio Telecom, to open its economy
The Ethiopian government has disclosed that it is opening up the tender process for the sale of a 40% stake in the government-owned telecom company, Ethio Telecom. What this implies is that potential investors can now indicate their interest to buy the stakes starting from Tuesday.
This is the first stage in a lengthy process that will lead to the selection of a successful bidder.
The sale of the minority stake in the state-owned Telecom Company is part of the government’s plan to open up the country’s economy.
As part of a larger plan to open up the economy, the Ethiopian government is also looking to license two private telecom operators to compete with the state-owned Ethio Telecom in the very lucrative but untapped telecom sector.
Deputy Director of Public Enterprises, Holding and Administration Agency, Zinabu Yirga, said at a press conference in the capital Addis Ababa on Monday:
“The government wants state-owned enterprises to be competitive and productive, the authorities’ motivation for selling a part of Ethio Telecom to private operators,”
“As part of the broader opening up of the sector, Ethiopia is also moving to license private operators to compete with Ethio Telecom.”
Ethio Telecom was founded in 2010 and currently has about 53 million subscribers. Since December 2020, the company has generated over $600 million in revenue. There are feelers that the government plans to keep a 55% stake in the operator while the remaining 5% will be offered to local investors through an IPO.
Last month, the government has been able to award one of the two available licenses to the Global partnership for Ethiopia, a telco-consortium led by Kenya’s Safaricom. The consortium was able to secure the license with a bid of around $850 million. The MTN group which also presented a bid of $600 million was denied a license by the regulator because the amount presented was too low. The company has disclosed that it will resubmit another bid for the license.
According to Brook Taye, a senior advisor at the finance ministry, the 40% in Ethio Telecom will be sold as a single stake to a single investor.