Ethio Telecom

Not for sale: Ethiopia suspends foreign bids for Ethio stake

20 August 2020 | Melanie Mingas

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After months of speculation around who could bid for a stake in Ethio Telecom, the Ethiopian government has u-turned on its earlier decision to allow foreign companies to participate.

Citing the need to prevent foreign firms from profiting from its infrastructure investments, the government said it has reviewed those who wished to acquire a stake but suspended the sale.

As an alternative, however, non-domestic firms are allowed to rent Ethio’s infrastructure, or build their own, according to comments from the firm’s chief executive, Frehiwot Tamiru, reported by The East African.

She is quoted as saying: “We have built sufficient telecom infrastructures like fibre cables and mobile base masts that we can rent it to the newly entering companies. So the incoming telecom operators will either use our existing infrastructure by renting or build their own.”

Since the sale was announced several entities outlined proposals to bid for the 40% stake.

In February, Kenyan operator Safaricom said it would place a bid as part of a consortium with Vodacom and other companies. In fact, Safaricom – itself 35% owned by Vodacom – issued a statement to the Nairobi Securities Exchange saying that it is looking for partners for the Ethiopian venture.  

That same month Strive Masiyiwa’s Econet also confirmed it was “actively developing interests”. Etisalat, MTN and Orange were also named as potential investors.

As Capacity previously reported, the Ethiopian government is keen to boost foreign investment and open up competition in its telecoms market through the privatisation of the state-owned national operator, Ethio Telecom.

Last year the minister of finance, Eyob Tekalign Tolina (pictured), told Reuters that Ethio Telecom had appointed KPMG to advise it on the sale. He had previously said that the need for telecoms infrastructure investment in the country is “huge”.

Under the plan, two new operators would have been licensed to compete with Ethio Telecom, while the new licensees would also be offered a stake in the firm. The government previously hinted that Ethio Telecom could be split into two separate services and infrastructure companies.

Last June the Ethiopian government confirmed it is seeking $2.2 billion in investment and the following month said it would follow Myanmar’s example in selecting the new mobile operators.

Given the progress and pledges to date, this latest decision has surprised many. Ethiopia has a population of 100 million and frequently suffers outages. In late June, services were suspended for three weeks on “national security” grounds following the death of singer Hachalu Hundessa.