Ethiopia delays part-sale of Ethio Telecom
The government of Ethiopia has postponed its sale of 40% of state-controlled Ethio Telecom, blaming “recent developments and fast-moving macroeconomic changes”.
The move by the Ministry of Finance comes just weeks before Safaricom is due to become Ethio Telecom’s first competitor in the market of 115 million.
Safaricom Ethiopia, in which Safaricom Kenya has a 55.7% stake, has set 9 April as its launch date.
The Ministry of Finance started a tendering process for the 40% stake in Ethio Telecom in June 2021. But it said: “Given the recent developments and fast-moving macroeconomic changes, both globally and from a country perspective, the government of Ethiopia has chosen to postpone the privatisation process.”
This is the second upset the country has had in its efforts to widen the telecoms market. In late 2021 it invited bids for a third operator, to compete with Ethio Telecom and Safaricom. But then the Ethiopian Communications Authority (ECA) said in a note to the industry that it had received “concerns and requests from several prospective bidders to delay the process”.
The Ministry of Finance says that Ethio Telecom, which is led by CEO Frehiwot Tamiru (pictured), has “continually improving” financial performance and a delay “will result in better value for all the parties involved”.
However Capacity reported in February that the company achieved only 86.4% of its target revenue in the last half of 2021, though that was 6.7% up on the same period of 2020.
The actual revenue was 28 billion birr (US$565 million). Revenue from international business was $74.8 million, 89.3% of the target.
The other shareholders in Safaricom Ethiopia are Japan’s Sumitomo with 27.2%, the UK government via its wholly owned CDC Group with 10.9%, and Vodacom of South Africa with 6.2%. Vodacom and Safaricom Kenya are both part of the Vodafone group.