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Blow to Ethiopia govt’s plan to privatise telecommunications

Ethiopia , 17 Sep 2020

Ethiopia’s government intention to open up the country’s telecommunications industry to private companies has been dealt a blow following revelations that no all key players are on board.

While the country’s finance ministry is enthusiastic about the privatisation plan, reports citing Ethio Telecom officials have surfaced which suggest the operator is keen on retaining its monopoly within what is considered to be one of the largest telecommunications markets on the continent.

In August 2018, ITWeb Africa reported Ethiopia was edging closer to the privatisation of its national operator Ethio Telecom. But in March 2020, the government said the schedule was too aggressive and a new process only likely to take place at a later date.

Early September 2020, Ethiopia’s Minister of Finance, Eyob Tekalign announced the country is now pursuing partial privatisation of Ethio Telecom and the allocation of two new telecom licenses.

While affirming that the plans are on track, the Minister confirmed the transactions would not be completed in 2020 and would be extended to February 2021. Tekalign attributed the delay to constraints, including COVID-19.

“The State has a calendar for the two processes. The reform initiated since 2018 by the government is on track. While the finalisations will no longer take place in 2020 because of various constraints, including COVID-19, the state is giving itself until February 2021,” the Minister.

Privatisation is intended to attract foreign investments that would stimulate the growth of the local economy and improve and expand connectivity nationwide.

Aside from COVID-19, the process has been impacted by regulatory complexity and a failed attempt to hold national elections.

According to the Ethiopian Communications Authority (ECA), at least 11 companies had indicated interest in official entry into the country’s telecommunications market.

In July 2020, the regulator announced the process received interest from Global Partnership for Ethiopia (a consortium of telecommunications operators made up of Vodafone, Vodacom and Safaricom); Etisalat; Axian; MTN; Orange; Saudi Telecom Company; Telkom SA; Liquid Telecom; Snail Mobile, Kandu Global Telecommunications and Electromecha International Projects.

But in August reports emerged that the regulators decided against considering competing bids for operating licenses from international competitors.

Quartz reported a rift between the management of Ethiopia’s only operator, state-owned Ethio Telecom, and the ECA contributed to the suspension of the privatisation process. But early September 2020, state-owned local media reported that a 5% stake in Ethio Telecom would be sold to citizens.

With the new stake sharing model, the Ethiopian government will retain a major 55% share in Ethio Telecom, citizens will hold 5% stake while the remaining 40% stake will be available to international companies seeking to invest in the national operator.

The new licenses alone are expected to generate about US$1-billion in revenue for the government, and the Prime Minister quickly took to his Twitter account to dispel news that the privatisation process was off.

He disclosed that on 7 September 2020, he held a meeting with the main stakeholders in the country’s telecoms sector to harmonise the activities on the liberalisation of telecommunications and to assess the process for the sector’s planned partial privatisation.

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