Ethiopia Telecom moved closer to privatisation
The Ethiopian government has finally released a Request for Proposal (RFP) for the partial privatisation of state-owned operator Ethio Telecom.
The government wants to sell a 40% stake in the company in a move that is widely considered an effort to make the telco more competitive.
The aim of the RFP is to invite proposals from interested parties who, according to authorities, “can add value to the company by bringing in the best practices in terms of operations, infrastructure management and next generation technological capabilities.”
The government wants to tap into the potential of the country’s telecommunications industry and believes Ethiopia’s fast-growing economy, its youthful population and its low tele-density are key reasons to attract private investment.
According to the RFP, Ethio Telecom’s robust telecommunication infrastructure coupled with a strong financial performance will offer significant competitive to any investor.
Ethiopia’s Ministry of Finance stated: “This RFP is open to all interested parties and not limited to those companies who indicated their interest by submitting an Expression of Interest.”
The government also plans to sell a 5% stake in the company to local investors via an initial public offering (IPO). The government will retain a 55% controlling share in the company.
In June this year, Deputy Director of Public Enterprises Holding and Administration Agency Zinabu Yirga said, “The government wants to make sure that the state-owned enterprises become competitive and productive and therefore, 40% of Ethio Telecom will be sold to a foreign operator.”
Kenya’s Safaricom, part of a consortium of operators including Vodafone, Vodacom, the UK’s CDC Group and Japan’s Sumitomo Corp is set to launch operations in Ethiopia next year after being awarded an operating licence and compete with Ethio Telecom that has been providing telecommunication services in the country as a monopoly.
Currently, Ethio Telecom has over 53 million mobile phone subscribers.