Ethiopia prepares for partial privatisation of Ethio Telecom

Ethiopia prepares for partial privatisation of Ethio Telecom

A customer holds a 3G prepaid sim card after buying the service from an Ethio-Telecom shop in Addis Ababa, Ethiopia, November 12, 2019. REUTERS/Tiksa Negeri Ethio Telecom CEO Frehiwot Tamiru told a press conference in late July that the telecoms company’s revenues had grown significantly, in large part due to network expansion and a 5.8% increase in its subscriber numbers.

At 46.2 million subscribers, the company now covers account nearly half of the country’s population. Part of Ethiopia’s economic reform

The state monopoly’s privatization, part of Prime Minister Abiy Ahmed’s extensive economic reform programme, is underway as the Ethiopian government processes the dozen bids it received for a minority stake from multinationals and consortiums in June.

The deal, probably the most anticipated corporate restructuring on the continent, attracted bids from nine telecoms companies including MTN Group of South Africa, Saudi Telecom, Atisalat, Telkom SA, and a consortium of the Vodafone group which includes Kenya’s Safaricom, and its parent company, Vodacom of South Africa. It also includes two non-telecom operators.

READ MORE Vodacom boasts a boost in international portfolio across Africa

Ethiopia plans to partially privatise the company by selling a stake to whoever wins the bidding process, as well as offering a small stake (reportedly 5%) to “the people”, as insiders told Reuters in May. Groundwork laid

Already, at least two of the Big Four accounting firms are involved in laying the groundwork for the eventual deal. In June, the international consulting firm Deloitte & Touch was appointed transaction advisor, joining its peer KPMG’s East African subsidiary, which has been conducting an asset evaluation of the state monopoly.

READ MORE Ethiopia: Orange CEO tempers ambitions for Ethio Telecom

Despite the recent announcement of a jump in revenues, and similar previous growth, Ethio Telecoms numbers are a major reason why the PM Abiy administration wants to bring in an international partner . “While Ethio telecom has significantly improved its services over the last few years, it is no wonder the government sees the potential revenue and profit growth as one of its key drivers for privatising ethio telecom,” journalist Samuel Getachew wrote in The Reporter Ethiopia . “Last year’s result shows Safaricom generated twice as much revenue as Ethio telecom with fewer customers.” What does all this mean?

Part of the reason behind privatising the telecoms sector in Ethiopia is to issue two new licenses to private firms to boost competition […]

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