Ethiopia Calls for Investment in State Operator Ahead of Split

Ethiopia Calls for Investment in State Operator Ahead of Split
Addis Ababa

The government of Ethiopia is inviting bids from private operators for a 30-40% stake in state-run Ethio Telecom.

In addition, Prime Minister Abiy Ahmed announced that the state operator would be split in two in order to foster greater competition in the market, saying: “There will be two telecom corporations and shares will be sold in both. Somalia, with a population of 12 million, has four telecommunications firms. Ethiopia - with 100 million people - has one. There needs to be competition in the country.”

Opening up its monopoly on telecoms is a significant departure from Ethiopia’s previously cautious attitude towards private investment. If they can accept working with the government as the price to pay for access to one of the most untapped telecoms markets in the world, major telecoms will likely be interested.

Abiy noted that the shares in both units of the split Ethio Telecom will be sold off after “one year or two years of intensive study”, and clarified that the government intended to prioritise firms that fall within the top ten largest international telecoms players. This could include South African firms Vodacom and MTN, both of which have indicated their interest in Ethiopia. Additionally, 5% of the units will be made available to the Ethiopian public.

MTN has said that Ethiopia “would be a natural fit for MTN’s existing pan-African footprint”, while Vodacom noted that “Ethiopia is an attractive market so it follows that there would be interest. Naturally this is dependent on what might become available and if it fits within our investment parameters.”

Major operators have evidently been anticipating an end to Ethiopia’s state monopoly. Since taking office in April, former army officer Abiy has introduced a spate of reforms in an attempt to end the political turmoil which he considers to have stalled progress in the country, which has a population of 100 million people – of which 40% are under the age of 15.

Image credit: Jean Rebiffé - Own work, CC BY 4.0, https://commons.wikimedia.org/w/index.php?curid=48468502

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