Ethiopia invites bidders for 40pc stake in Ethio Telecom

Ethiopia has invited private investors to bid for shares in the proposed sale of a 40 per cent stake in the state-owned telecommunications service provider Ethio Telecom.

"The government of Ethiopia has released an RFP (request for proposal) for the partial privatisation of Ethio Telecom to invite proposals from interested parties who can add value to the company by bringing in best practices in operations, infrastructure management and technological capabilities," the ministry of finance said.  

The RFP is open to all interested parties and is not limited to companies that had previously submitted an expression of interest.

Interested parties must pay a non-refundable fee of $20,000 to obtain the RFP and submit a confidentiality undertaking to the Ethiopian government.

Written requests should be sent to [email protected] starting Tuesday.

The partial privatisation aims to make the company more efficient in providing telecom services in the country of 120 million, Africa's second most populous nation.

The privatisation is part of the country's Indigenous Economic Reform Programme. The objective is to broaden the role of the private sector in the Ethiopian economy, improve the efficiency of public enterprises, enhance their competitiveness, increase their access to capital, and enhance the quality and accessibility of their services.

Ethio Telecom, with about 45 million subscribers, is one of the most profitable companies in the country.

It reported annual revenues of 56.5 billion birr (about $1.3 billion) in the year to June 30, 2021.
Revenues grew by 18.4 per cent from the previous year, the company says.

Analysts reckon that Ethiopia has decided to sell its stake in state-owned enterprises, including Ethio Telecom, primarily to pay off its huge debts.  

Ethiopia, one of the last countries in the world to privatise the key sector, has been trying to sell off its telecom shares for three years as part of economic reforms with the help of various international financial institutions.

The reforms are also intended to increase employment, reduce poverty and grow the country's economy in a sustainable manner.

In May, one of the licences was awarded to a consortium led by Kenya's Safaricom, which won by offering $850 million.

The consortium is expected to launch telecom services in Ethiopia in January next year.

Over the past decade, Ethiopia has become one of the fastest-growing economies in Africa. Its young population, high gross domestic product growth rate, and increased private sector investment offer valuable growth opportunities.  

Further, low telco density in Ethiopia highlights the huge untapped potential in the telecommunications sector.