Ethio Telecom, Ethiopia’s state-owned telecommunications giant, has announced a share price of 300 birr ($2.54) for its planned sale of 100 million shares, marking a significant step in the country’s broader economic reform efforts. According to a Reuters report, this sale, using the company’s mobile payment service, represents 10% of the telecom provider’s stake, which will be offered exclusively to Ethiopian investors.
CEO Frehiwot Tamiru announced the move as part of a strategy to prepare the company for a future stock market listing. The Ethiopian government plans to follow up this initial domestic offering by selling a further 45% stake in Ethio Telecom to foreign investors. This phased privatization comes as Prime Minister Abiy Ahmed pushes to open Ethiopia’s economy to greater private investment. As part of these reforms, the country is set to launch its first-ever stock exchange next month, offering opportunities for further privatization of state-owned enterprises.
Brook Taye, CEO of Ethiopia Investment Holdings, reaffirmed the government’s commitment to selling a combined 55% stake in Ethio Telecom, with the 10% stake to domestic buyers followed by a 45% sale to private and foreign investors. Taye also indicated that the Ethiopian parliament is expected to pass legislation allowing foreign investors to enter the market within the next two to three months, signaling significant progress in Ethiopia’s financial liberalization efforts.
This move also marks Ethio Telecom’s debut on Ethiopia’s soon-to-be-established stock exchange, making it the first company to be listed on the platform. The telecom provider, which has long held a monopoly in the Ethiopian market, serves over 120 million people. However, competition has intensified following the entry of a consortium led by Kenya’s Safaricom in 2021, after Safaricom secured Ethiopia’s first private telecom license. Safaricom’s presence in the market has grown, doubling its customer base in Ethiopia to 4.4 million by March 2024.
Despite the competition, Ethio Telecom reported strong performance in its 2023/24 fiscal year, with a 21.7% increase in revenue to 93.7 billion birr ($1.62 billion) and an 8.9% rise in its subscriber base to 78.3 million. The company has also significantly improved profitability, quadrupling its net profit over the past six years. Looking ahead, Ethio Telecom is targeting a 75% revenue increase and plans to expand its customer base to 83 million in the coming fiscal year, focusing on new digital and international service offerings.
As Ethiopia continues to open its economy, Ethio Telecom’s partial privatization reflects the country’s ambition to attract global investment while offering domestic stakeholders the chance to participate in the telecom industry’s future growth. With a stock exchange set to debut and further privatization efforts on the horizon, Ethiopia’s evolving financial landscape is poised for transformation.
