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The government said it is still committed to the sale, but that it was necessary to pause the process due to ‘macroeconomic changes’ on both a national and international level
The road to liberalising Ethiopia’s telecoms sector – until recently one of the last remaining telecoms monopolies in the world – has been a bumpy one.
While the wider liberalisation of Ethiopia’s economy had been discussed for many years, it was Prime Minister Abiy Ahmed who first set the ball rolling in earnest in June 2019, announcing plans to make two new operating licences available for foreign operators to win at auction, as well as selling a significant minority stake in state-owned telecoms monopoly, Ethio Telecom.
After a delayed auction process, a Safaricom-led consortium called the Global Partnership for Ethiopia won one of the licences for $850 million in 2021. The Global Partnership is currently planning to launch commercial mobile services next month and is already engaged in network sharing talks with Ethio Telecom.
The second licence, however, went unsold, with MTN’s $600 million bid deemed too low by the national telecoms regulator. Initial plans to relaunch an auction for the second licence were suspended in December last year.
Now, it seems that the plan to sell a 40% stake in Ethio Telecom may flounder too, with the government announcing that it will postpone plans for the stake sale.
"Given the recent developments and fast-moving macroeconomic changes, both globally and from a country perspective, the government of Ethiopia has chosen to postpone the privatisation process," read a statement from the Ethiopian Ministry of Finance.
"The Government believes that taking time to accommodate the improved macroeconomic situation as well as continually improving the financial performance of Ethio Telecom will result in better value for all the parties involved."
Companies that have already expressed interest in the acquiring the stake have reportedly been told to await updates from the ministry in the near future.
When it comes to concerns on a national level, the context here is plain to see. Ethiopia is currently going through a brutal civil war centred on the northern Tigray region, with casualties estimated to exceed 100,000 since the start of the conflict in late 2020. Naturally, the war has had major connotations for the country’s telecoms sector, destroying large amounts of Ethio Telecom’s existing infrastructure in the region, as well as making the country far less appealing for potential foreign market entrants.
Ethio Telecom’s revenue in H2 2021 was $565 million, around 86.4% of its target, hence it makes sense that the government will want to wait for the financials to improve before proceeding with a sale.
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