March 19, 2022

Government postpones partial privatization of Ethio Telecom

News

Recent developments and fast-moving macroeconomic changes both globally and from a country perspective necessitated the postponement

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By Addis Zeybe

Addis Zeybe is a Digital News Media.

Government postpones partial privatization of Ethio Telecom
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Credit: The World Bank

The Ethiopian government announced to postpone the partial privatization of the state-owned telecom monopoly, Ethio Telecom.

“Recent developments and fast-moving macroeconomic changes both globally and from a country perspective, the government of Ethiopia has chosen to postpone the privatization process,” according to the statement issued by the Ministry of Finance.

“The Government of Ethiopia believes that taking time to accommodate the improved macroeconomic situation as well as continually improving financial performance of Ethio Telecom will result in better value for all the parties involved and in particular the citizenry of Ethiopia.”

Though it is affirmed that the government will work towards finalizing the privatization process, the specific time the bid will resume is not disclosed. 

“The government of Ethiopia remains committed to finalizing the privatization process and looks forward to re-engaging in due course with existing and additional parties that have expressed interest in a request for proposal.”

In September 2021, the government proposed partial privatization of Ethio Telecom by selling 40% of the equity share capital of the company and invited proposals from interested parties who can add value to the Company by bringing in best practices in terms of operations, infrastructure management, and next-generation technological capabilities. 

The Ethiopian government launched a “Homegrown Economic Reform” agenda, which aims to transform Ethiopia from a largely agrarian low-income country to an industrialized lower-middle-income country by 2030. This will require the private sector to take charge of growth amid waning public sector financing capacity. In this framework, Ethio Telecom and Ethiopian Airlines were the prominent institutions among proposed privatization offerings.

The Ethiopian telecom industry was long dominated by the state-owned Ethio Telecom until Safaricom Ethiopia, a consortium of partnerships which consists of Safaricom, Vodacom, Vodafone Group, Sumitomo Corporation, and CDC Group, was granted a license to operate in the country in July 2021.