Ethiopia to offer minority stake in Ethio Telecom, issue two telecom licenses

The Ethiopia government is set to issue two telecoms licences to multinational telcos, according to a senior official. The Horn of Africa country also plans to offer a minority stake in Ethio Telecom, the monopoly operator, and foreign firms will be invited to bid.

“We have announced the market structure as ‘two plus one’,” State Minister of Finance Eyob Tekalign Tolina told Reuters in a telephone interview, referring to the two new licences and a 49 percent stake in Ethio Telecom.

Ethiopia’s telecoms industry is considered the big prize in a push to liberalise the country’s economy launched last year by PM Abiy Ahmed because of its huge protected market serving a population of around 100 million.

The country is also considered one of the final frontiers globally for multinational telcos which have been eagerly awaiting the government’s announcement on the market structure since parliament passed a bill last month outlining the scope of a regulator for the sector.

An executive at one of the companies interested in entering Ethiopia told Reuters that the market structure announced last Friday is “as expected and very sensible approach”.

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UK’s Vodafone, South Africa’s MTN, France’s Orange and UAE’s Etisalat are likely to be among the leading contenders vying for entry into the Ethiopian market.

Last month, Reuters reported that the government had decided to issue two new licenses in part because preparing Ethio Telecom for a partial sale is proving a lengthy process.

Partially privatising the state-owned operator and allowing two foreign operators to enter the market to compete with the incumbent will improve network quality and speed, the finance ministry said in a statement released on Friday. Improved digital infrastructure will also enable job creation for Ethiopia’s youth, the statement read.

Analysts said the market structure showed that the government had done what officials had publicly said they would do: review the experiences of other countries in opening up their telecoms sectors to determine what had worked and what had failed.

The state minister did not provide a timeline for the bidding process, but he told Reuters last month that the government hoped to open bidding in September.

The government will expect the winning companies to start operations next year, initially using Ethio Telecom’s infrastructure to run their networks, the sources said.