Ethiopia has decided to halt the sale of its state-owned telecommunications operator, Ethio Telecom, to foreign investors.
Instead, the government will prioritize domestic retail investors before listing the company on the nation’s upcoming securities exchange.
Originally, the Ethiopian government planned to sell 45% of Ethio Telecom to foreign investors. This approach was abandoned in November after Orange SA, a major contender, withdrew from the bidding process.
Emirates Telecommunications Group Co. was also rumored to have considered a bid but did not proceed.
“There were bidders, but each one of them has left the process at one point,” said Abdurehman Eid, CEO of Ethiopian Investment Holdings, which is overseeing the sale along with the finance ministry. “At the end, we felt it’s probably better to halt the process.”
Eid explained that foreign interest did not meet Ethiopia’s expectations. “The priority now is to expedite the sale of 10% to retail investors, who are showing a huge appetite,” he noted during an interview at a sovereign wealth fund conference in Mauritius.
The focus on foreign investors will resume after Ethio Telecom is listed on the Ethiopian Securities Exchange (ESX), set to commence operations in October.
Ethio Telecom, the largest telecommunications operator in Africa’s second most-populous country, had a monopoly for decades. By January, the company boasted 74.6 million subscribers and recorded a profit of 11 billion birr ($191.6 million) for the first half of the fiscal year.
The shift in strategy underscores Ethiopia’s intention to leverage domestic investment capacity. The decision to prioritize local investors aligns with broader economic goals, aiming to stimulate local participation in major economic sectors.
This move is part of a larger plan to list five other state-owned companies on the ESX. According to Eid, proceeds from these divestitures will be utilized to reduce public debt.
Over the years, enterprises controlled by the government have accumulated substantial debt, leading to financial struggles.
The Liability Asset Management Corp., established three years ago, currently manages close to 780 billion birr in debt.
By redirecting the sale of Ethio Telecom shares to local investors, Ethiopia is fostering a more inclusive investment environment and setting a precedent for future listings.
The new strategy is expected to enhance domestic capital markets and provide more opportunities for Ethiopian citizens to invest in the country’s economic future.