Ethio Telecom asset valuation rise by 42%

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Frehiwot Tamiru, CEO of Ethio-telecom (Photo: Anteneh Aklilu)

First half of 2020/21 records success boom

On a press briefing held on the 21st of January 2021, Ethio telecom CEO, Frehiwot Taimru highlighted the developments of the firm for the first half of the fiscal year. She pointed out growth across the board from revenue increase, subscriber growth as well as a successful completion of the total asset evaluation of the firm. She expressed that the firm’s current and future successes are an attribute of the concerted efforts of all her diligent staff across all levels of management.

State-run Ethio Telecom which is expected to be partly sold off as Ethiopia liberalizes its economy has completed its asset valuation works. The telecommunication giant’s total asset value has increased by 42% using IFRS reporting standard, according to Ethio Telecom. This was the telecom service provider’s first time valuation.

As part of its six month plan according to Frehiwot Tamiru, CEO of Ethio-telecom, valuating the asset would help in the privatization as it better places the firm in the attraction of the market place.

In June 2019, Ethio telecom hired KPMG East Africa to conduct an asset valuation, and Deloitte and Touch was appointed as transaction advisor. “The valuation was done from floor to the book since it is for the first time,” said Frehiwot during the press conference she held on Thursday January 21.

Statistic data released by statista.com on April, 2017 shows the value of the assets held by Ethio Telecom in 2015/16 fiscal year to be worth 37.9 billion Birr. This in alignment with the 42% increase given by the telecommunications giant can give a rough estimate of the value, although not fully conclusive when you factor in growth of the firm through the time gap of then to now.

Two weeks ago the Council of Ministers had enacted a regulation to adjust Ethio Telecom’s establishment regulation which integrates certain changes including allowing Ethio telecom to engage in Mobile Money and related digital finance services. Also regarding the authorized capital, the regulation increased to 400 Billion birr from 40 billion birr of the 2010 regulation. The regulation also gives the go ahead to engage in other related activities including forming an entity and gives the right to invest on equities locally and at international level.

Briefing journalists Frehiwot Tamru announced that for the first half of the fiscal year of 2020/21 the company had conducted vast reform activities and advancements to attain its set strategic objectives. The strategies include; preparing for the upcoming competitive market, enhancing customer experience and satisfaction through ensuring operational excellence, deploying new and enhancement of infrastructure and systems as well as service availability.

On matters enhancement of infrastructure and systems, Ethio Telecom has begun negotiations to lease the infrastructure as part of the company’s efforts to increase its revenue. The infrastructure is set to be leased to foreign companies. Ethio Telecom CEO Frehiwot Tamiru expressed that the company called on foreign companies to use their infrastructure whilst they enter the Ethiopian telecom sector. Moreover, she noted that the firm had begun talks with various international telecommunications companies who responded to the call. On similar lines, negotiations with the French Orange company are set to kick start in capital next week. As part of its preparation for the infrastructure sharing business, according to Frehiwot, the company has undertaken several initiatives to improve existing infrastructures and build new ones.

Currently Ethio telecom has more than 7,300 towers which are ready to be shared and has developed hybrid power solutions strategy to ensure site availability and made it scalable enough to accommodate additional tenant requirements.

“Currently, we are running 137 projects on infrastructure and system capacity enhancement, development and expansions aiming to boost network coverage capacity, and quality of services,” said the CEO noting that Ethio telecom will also launch mobile money services within short period of time.

With regards to the development of the firm for the first half of 20220/21 fiscal year, there has been a growth boom in all fronts. The state owned enterprise was one of the highest earning companies in the country and during the first half of the current fiscal year the company  generated 25.5 billion birr revenue, which is 95 percent of the target and 12.3 percent increment from the previous budget year similar period.

Similarly, a rise in subscribers was accounted for during the period. Total subscribers reached 50.7 Million achieving 104 percent of the subscriber base target and an increase of 11.2 percent from June 2020 landing. Mobile voice subscribers reached 48.9 Million, Data and Internet users 23.5 Million, Fixed Services 981K and Fixed Broadband subscribers reached 309.4K. Population and geographic coverage are 95percent and 85.4 percent respectively. Telecom density has also reached 50 percent.

The CEO further highlighted that 80.2 dollar million was generated from international business, registering 105% of the target and 5.9% increase from same period last year.

The company for the first half also faced a set back through: COVID-19, fiber and copper vandalism, power interruption, land acquisition delay, and increasing operational costs. However, despite the challenges it remained steadfast in its growth.