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Telecom privatization progresses to bidding stage

The telecom privatization which grabbed the attention of significant players under the Expression of Interest (EoI) stage, has moved to the bidding stage process, the Ministry of Finance (MoF) has disclosed.
The Ministry which is responsible to follow the process with Public Enterprises Holding Administration Agency had issued the EoI mid-June that closed after a month. Recently, Eyob Tekalegn, State Minister of MoF told Capital that several EoI had come, while he did not give figures.
This week, MoF has issued a request for proposal (RFP) for the partial privatization of the country’s telecoms provider, Ethio Telecom.
Bidders are required to pay a USD 20,000 to access the RFP document to be part of the bidding process.
The bid announcement stated that Ethiopia’s young population, high gross domestic product growth rate, and increased private sector investment offer valuable growth opportunities, “Further, low Tele density in Ethiopia highlights the huge untapped potential in Ethiopia’s telecommunication sector. The Ethio Telecom’s robust infrastructure coupled with its strong financial performance will offer a significant competitive advantage to any investor.”
It invited 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 RFP is open to all interested parties and not limited to those companies who indicated their interest by submitting an EoI.
It’s to be recalled that the government decided to sale 40 percent of Ethio Telecom shares for interested foreign investors, while it would be single. Eyob said that interested investors shall come as a single buyer to get the stated share on the telecom giant, which would get in competition for the first time since the Safaricom lead consortium would commence operation in the first quarter of next year.
The investment teaser released in association with MoF’s announcement for EoI for Ethio Telecom, the century and quarter telecom monopoly, stated that the enterprise’s total equity and liabilities is over 79.8 billion birr.
The Investment Teaser ‘Project Nigat’ was conducted by Deloitte Consulting Limited, which was hired by MoF to consult on the partial privatization.
“Business valuation that includes the turnover of the company, services and their value and the total generation in the coming years is critical rather than total asset to measure the value of a company,” one of the sector actor closely following the partial privatization process told Capital.
Of the stated amount, the current assets are 38.9 billion birr and the remainder 40.9 billion birr is noncurrent asset.
The enterprise equity that was stated on the investment teaser’s balance sheet was 25.29 billion birr, while the noncurrent liabilities and current liabilities are 27.2 billion birr and 27.3 billion birr respectively.
It explained that from the balance sheet the mobile network equipment is the largest non-current asset class constituting 42 percent of property, plant and equipment as at 31 December 2020.
As per the investment teaser, Ethio Telecom has over 7,400 tower sites (700 plus sites in Addis Ababa); of which 96 percent are greenfield towers and remaining are rooftop towers with the length ranging from 2 metres to 102 metres and an average height of 36 metres, while it has 7,777 real estate properties. It has over 21,000 km of fiber network spread across Ethiopia and about 85 percent is buried.


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