Ethiopia aims to raise $675m in Ethio Telecom share sale

The Ministry of Finance announced in a request for proposals that it will sell “up to 45% of the equity share capital of the company” in a partial privatisation.

The ministry said: “Over the last decade, Ethiopia has become one of the fastest growing economies in Africa. Its young population, high gross domestic product growth rate, and increased private sector investment offers valuable growth opportunities.”

But the government has set a deadline of 23 February, Thursday next week, to receive proposals from interested parties.

It wants investors to “add value to the company by bringing in best practices in terms of operations, infrastructure management and next generation technological capabilities”. Potential investors must pay $20,000 to receive details from the ministry .

CEO Frehiwot Tamru (pictured) said in September that she aims to increase the company’s subscriber base by more than 10% over the next year, despite facing competition from Safaricom Ethiopia. The target is 71 million mobile voice customers, she said.

In November 2022 the ministry said it planned to sell 40%, when it revived the sale plan after an eight-month pause because of what it called “recent developments and fast-moving macroeconomic changes”.

That was largely considered to be a reference to the civil war being waged between the government of Ethiopia in Addis Ababa, led by prime minister Abiy Ahmed, and the Tigray People’s Liberation Front. The two sides signed a truce in November and are now in discussions about a long-term peace.

Since the ceasefire, Ethio Telecom has restored service to 27 towns and cities, the company said in January.

A valuation a year ago by Deloitte, which is managing the sale, suggested that Ethio Telecom was worth 80 billion birr (about US$1.5 billion), implying the government is hoping to raise $675 million from the share sale. If the government had stuck to its 40% plan it would have been expecting to raise $600 million.

The ministry said the “low teledensity in Ethiopia highlights the huge untapped potential in Ethiopia’s telecommunication sector”, and added that Ethio Telecom’s “robust infrastructure coupled with its strong financial performance will offer significant competitive advantage to any investor”.

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