Two-part privatisation for Ethio Telecom?

Details: Vaughan O'Grady; Category: Business; 19 June 2019; 5417 views

Following last week’s parliamentary approval of a bill to create an independent communications regulator, more news is emerging of the potential opening up of Ethiopia’s telecommunications market.

News agency reports indicate that Ethiopia plans to split the country’s incumbent operator, Ethio Telecom, into two separate businesses before it is privatised.

Initial indications are that Ethio Telecom could be divided along what are called ‘infrastructure and service sector lines’. However, how this will be carried out, and indeed what form the privatisation will take, are as yet unclear.

While potential outside investors will no doubt support plans to open up one of the world’s few remaining closed telecoms market, with a population of over 100 million and room for expansion, some detail will be welcome. In particular, investors, who could include some of the African continent’s big service provider names, will want to know how much of a stake, if any, will go to government, and the terms of the planned privatisation.

There’s also the question of investment. Modernising the telecommunications sector will not be a simple task costing, some estimates suggest, over $2bn.

Nevertheless, modernising the mobile and fixed communications sector is a central policy of the government, and this privatisation is seen by many commentators as an important show of intent in the effort to attract outside investment.