Ethiopia pushes telecoms privatisation despite security worries
Second, companies would have to lease the use of towers from Ethio Telecom, the state provider, and would not be able to invite third parties to build new infrastructure, as happens routinely elsewhere on the continent, although they would be allowed to build it themselves. Among the telecoms operators that have expressed interest are Etisalat, Axian, MTN, Orange, Saudi Telecom Company, Telkom South Africa, Liquid Telecom, Snail Mobile and a consortium of Vodafone, Vodacom and Safaricom. Some bidders also expressed scepticism at the sale of only a 40 per cent stake in the state operator, saying this would deprive potential bidders of management control. Ethio Telecom will retain 55 per cent and float 5 per cent to the public in a sale being overseen by Deloitte.
The International Finance Corporation, the World Bank division that lends to the private sector, is managing the sale of two new licences. “They are setting themselves up for a massive disappointment,” said one person familiar with the process. Instead of raising billions of dollars, he predicted, offers were likely to be in the low hundreds of millions. “They see this as the last Coca-Cola in the desert and everyone will kill for this thing,” he added. “They have this view that the way the world works and the way Ethiopia works are different. Well, good luck with that.”
Earlier this year, central bank governor Yinager Dessie told the Financial Times that Ethiopia “introduced a directive that allows non-financial institutions to operate” — an indication that it had previously considered allowing telecoms operators to offer financial services. Yet Mr Eyob acknowledged the restrictions on foreign participation in the financial sector meant that, for now at least, new entrants would not be able to offer mobile money services. He said companies would be able to build their own telecoms infrastructure if they wanted, as well as leasing from what he said was the ample infrastructure owned by Ethio Telecom. The minister added that what he called the government’s swift victory against the Tigray People’s Liberation Front after fighting last month should reassure investors that a cause of political instability had been decisively settled. Yet some investors are worried that political instability could persist, undermining the investment case.