Ethio Telecom hires KPMG to advise on sale of 45% stake

Ethio Telecom hires KPMG to advise on sale of 45% stake

28 January 2021 | Alan Burkitt-Gray

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Ethio Telecom, the monopoly provider in Ethiopia until two new operators are licensed in March, has hired KPMG to determine its economic value in advance of a part-privatisation.

The government of Ethiopia, despite its political, economic and military challenges, is moving ahead with a plan to sell 45% of the shares in the company. The Ministry of Finance has hired Deloitte Consulting as its adviser.

According to reports from Addis Ababa, 40% will be sold to foreign buyers and 5% to local investors in Ethiopia, with the state holding on to 55%.

At the same time Ethio Telecom has announced its intention to move into digital and mobile financial services. CEO Frehiwot Tamiru (pictured) said: “This will completely change the business value of the company.”

Ethio Telecom will also share its infrastructure with new operators.

Frehiwot said the KPMG economic assessment, combined with the one to be conducted by Deloitte, will help the company’s executives better understand its real value. KPMG will also review the initial valuation of assets and perform a five-year valuation of Ethio Telecom.

Earlier this week Ethio Telecom reported a 12% increase in revenues in the six months to the end of December 2020. Profits were US$650 million, which it attributed to mobile voice services, which generated 49% of the figure, and data services, at 26%.

The government and the regulator, the Ethiopian Communications Authority (ECA), have started the process of issuing licenses to two new telecom operators. The ECA issued a request for proposals in November 2020 and the deadline for applications is 5 March.

Among the issues that the ECA and the government have to face in the liberalisation of telecoms are continuing conflict in its northern region of Tigray, where the rebels are supported by neighbouring Eritrea; a border dispute with another neighbour, Sudan; and a dispute with Egypt over a planned dam over the Nile.