Photograph — Reuters

Ethiopia is looking to sell a larger portion of its state-owned telecommunications company, Ethio-Telecom. The company has been in operation for 13 years and was the only operator in the country until October 2022 when Safaricom expanded its services in Ethiopia. The Ethiopian government plans to privatize Ethio-Telecom and has increased the number of shares it plans to sell from 40% to 45%.

The government had planned to sell the company in 2022 but paused the sale due to a civil war. The conflict has since ended, and Ethio-Telecom has restored services in 27 towns and cities since then. The government has set a target to raise $675 million from the share sale, which is up from the initial target of $600 million.

The Ethiopian government is allowing interested parties until February 23, 2023, to submit their proposals in response to the request for proposal, with a non-refundable fee of $20,000. The government has emphasized the untapped potential in Ethiopia’s telecommunications sector and highlighted Ethio-Telecom’s robust infrastructure and strong financial performance as a significant competitive advantage to any investor.

Frehiwot Tamru, the CEO of Ethio-Telecom, aims to increase the company’s 54 million subscribers by over 10% within the next year, despite facing competition from Safaricom Ethiopia. Ethiopia is the second-largest country in Africa by population, with over 112 million people. It is one of the last countries to introduce competition in the telecom industry, a process that started in 2019 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.

The government’s plan to privatize Ethio-Telecom is a significant step in opening up Ethiopia’s economy to foreign investors. This was a major part of President Abiy Ahmed’s agenda, and with the end of the conflict, his government is now working to repair its relationships with the West and boost the country’s struggling economy.

However, telecom tenders in Ethiopia have faced challenges in the past. In 2020, when the government invited telecom companies to bid for two licenses to compete against Ethio-Telecom, it initially refused to allow the new companies to outsource the building of new telecom towers and other infrastructure to dedicated tower management companies. This decision would have reduced the companies’ operating costs. The new companies were also barred from operating mobile money services, a significant part of Ethiopia’s telecommunications industry.

As a result, the tender process was underwhelming and only saw two bids, one from South Africa’s MTN and the other from a consortium made up of Safaricom, Vodafone, and Vodacom. In October last year, Safaricom began operations in Ethiopia.

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