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Ethiopia Is Giving Its Citizens A Chance To Stake In The Nation’s Telecoms Sector

| September 12, 2020

Ethiopia is the abode of one of the last remaining closed telecommunications markets in the world. But, much has changed since the past 2 months. Amidst the government’s plans to liberalize the sector, the Horn of Africa nation is offering 5 percent of state-owned monopoly telco, Ethio Telecom, to its citizens.

Retaining The Most

The Ethiopian government will retain a 55 percent stake in Ethio Telecom. Meanwhile, 40 percent is what international network carriers are currently tussling for. The leftover 5 percent is now available for Ethiopians who wish to have a share of the country’s telecom’s market pudding.

This development succeeds inconsistencies in the liberalization process, one which has questioned the true intentions of the Ethiopian government. Well, the country seems to be either rewinding its plans to open up the market or making the process too branchy.

Last month (August 2020), Ethiopia blacklisted foreign telecoms infrastructure companies from entering the country. Apparently, allowing such companies to operate will compromise the already-on-ground, multibillion-dollar telecom infrastructure investments Ethio Telecom has in Ethiopia.

The critical infrastructures of Ethio Telecoms are preserved by Chinese companies such as Huawei and ZTE. Nevertheless, the protection of the business as a strategic asset cannot be achieved by only maintaining a state monopoly in mobile services.

Ethiopia’s insistence on a monopoly telecom regime reduced the financial gain it derives from the sector. Also, it has been one of the key reasons the country is barely tagging along when it comes to the development of the ICT sector. With privatization, alongside competition, foreign investments are a given.

2021 Deadline

It was last year (2019) when Ethiopia first said it wanted to sell stakes in the monopoly telco. The plans were aggravated in order to reach actualization in 2020. But the coronavirus pandemic, electoral drawbacks and regulatory difficulties have slowed down the process.

To perhaps make things a lot more definite, a new and probably feasible deadline has been set. The government aims to have sold 2 new telecoms licenses by February 2021. Before then, auctions would be held and final decisions would be made.

Currently, the candidature for the license comprises France’s Orange, South Africa’s MTN and England’s Vodafone. While Orange is considered a forerunner in the bidding, MTN plans to established a business case and an investment case in Ethiopia.

Previously, however, the Ethiopian Communications Authority received 12 bids for the new licenses. The licenses to operate in a country of 110 million people are forecast to generate around USD 1 Bn in revenue. Not to omit that Kenya’s Safaricom—East Africa’s most profitable company—is also vying for a share.