Why Ethiopia wants to sell 45% of Ethio Telecom

The Ethiopian government wants to sell 45% of its telecom Ethio Telecom, which lost its monopoly in 2022, a figure up from the 40% sale announced in November 2022.

Why Ethiopia wants to sell 45% of Ethio Telecom
Frehiwot Tamru, CEO of Ethio Telecom

The Government of Ethiopia has increased the stake it intends to sell its telecom operator, Ethio-Telecom from 40% to 45%, the nation's ministry of finance stated that it is the government's plan to privatise the 13-year-old company that has been the sole operator in the country until Safaricom's expansion in October 2022.

In November 2022, the country's finance ministry said it planned to sell 40% of the telecom when it revived the sale plan after an eight-month pause due to "recent developments and fast-moving macroeconomic changes".

The aforementioned was a reference to the civil war being waged between the government of Ethiopia in Addis Ababa, led by prime minister Abiy Ahmed, and the Tigray People"s Liberation Front. The two sides signed a truce in November and are now in discussions about a long-term peace.

Since the ceasefire, Ethio Telecom has restored service to 27 towns and cities, the company said in January.

In 2022, Deloitte—the manager of the sale—stated that Ethio Telecom was worth about $1.5 billion, this means that the government is hoping to raise $675 million from the share sale. If the government had stuck to its initial plan for 40%, it would have been expecting to raise $600 million.

In a request for proposal, the Ethiopian Government has given interested parties until February 23, 2023, to submit proposals, and prospective investors can get information from the Ministry by paying a non-refundable fee of $20,000.

The ministry said the "low teledensity in Ethiopia highlights the huge untapped potential in Ethiopia’s telecommunication sector", and added that Ethio Telecom’s “robust infrastructure coupled with its strong financial performance will offer a significant competitive advantage to any investor”.

Ethio-Telecom CEO, Frehiwot Tamru said in September 2022 that she aims to increase the company's 54 million subscriber base by more than 10% over the next year, despite facing competition from Safaricom Ethiopia.

Ethiopia is home to over 112 million people, making it the second-largest country in Africa by population. It is one of the last countries in the world to introduce competition in the telecom industry, a rigorous process started by the government in 2019 as part of its Economic Reform Agenda, with the support of the International Finance Corporation. The reforms aim to increase jobs, reduce poverty and grow the local economy in an inclusive and sustainable manner.

Editor's Note: This is a developing story, it will be updated with more details.

Get weekly insights on tech startups and VC in Africa