Shifting gears

Ethiopia Resumes Ethio Telecom’s Stake Sale, Flaunts Second Operator License

By  |  November 17, 2022

In view of opening up its since-closed economy to investors, Ethiopia is still in the process of liberalizing its telecommunications industry. After selling the first telecoms license to a consortium led by Kenya’s Safaricom, the government is seeking international players interested in buying the second license. 

As such, Ethiopia has resumed offering a 40 percent stake sale in state-owned Ethio Telecom, which until Safaricom’s launch, sat comfortably on a market monopoly. In a separate plan, the country plans to issue a second telecommunications license, most likely to [said] potential investors. 

Inviting bidders to the consultation process, the Ethiopia Communications Authority (ECA), the industry’s official watchdog, said it would launch a formal tender process for the licensing by mid or end of January 2023. 

Per a document obtained from Ethiopia’s finance ministry, Deloitte Consulting Ltd. has been selected as the adviser for Ethio’s part sale, and a December 20th deadline has been set for investors to indicate their interests.

“ECA now plans to resume the licensing process for a third license or the second new full-service nationwide telecommunications license,” the regulator’s director general, Balcha Reba, said in a statement to Reuters. 

While the tender for the partial sell-out was first mooted in June 2021, the government postponed Ethio Telecom’s planned privatization due to economic predicaments. 

Generally, Prime Minister Ahmed Abiy’s efforts to free up the Ethiopian economy and attract investments were affected by the almost two-year conflict in northern Tigray; the crisis has claimed thousands of lives and displaced millions. However, on November 2nd, the federal government and Tigray’s regional forces signed a ceasefire agreement. 

Last May, Safaricom, Kenya’s top mobile operator, led the group of international investors who won the first telecoms license, bidding USD 850 M. This October, the company additionally secured a mobile money license and switched on its network services from the Ethiopian capital of Addis Ababa.

It has been a long time coming, and plenty of bumps have surfaced along the way, but Ethiopia’s telecoms reform is gradually progressing. With a heavyweight like Safaricom already hitting the ground running and a potential third force on its way, there is much that can unfold in little time. 

Lastly, recall, in May this year, Ethio Telecom unveiled the East African country’s first 5G internet connectivity network.

Featured Image: NitroCDN

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