Friday, July 12, 2024

Tele privatization faces setback


The telecom privatization which grabbed the attention of significant players under the Expression of Interest (EoI) stage has faced yet another extension in the biding process. The process was previously expected to be floated during the course of this month.
It’s to be recalled that the government floated the bid to sale 40 percent of Ethio Telecom shares to interested foreign investors at the beginning of January 2022.
As sources told Capital, several companies had submitted their proposal however the actual number of the companies was not revealed. For certain reasons, the government has given extensions for further preparation with the exact date yet to be indicated.
As part of the home grown economic reform programs the government had laid out the frame work for the privatization of public enterprises under the public enterprise proclamation no 1206/2020 in order to broaden the role of the private sector in Ethiopia’s economy. In line with the program, the government proposed a partial privatization of Ethio telecom by selling 40 percent of the equity share capital of the company and to that regard September 14, 2021 saw the Ministry of Finance (MoF) requesting eligible bidders to submit their proposal.
The Ministry which is responsible for the follow up process alongside the Public Enterprises Holding Administration Agency had issued the expression of interest on mid-June that closed after a month and issued a request for proposal on September inviting 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 objective of this strategy is to broaden the role of the private sector in the Ethiopian economy, improve the efficiency of public enterprises, enhance their competitiveness, increase access to capital, and enhance the quality and accessibility of services,” stated the investment teaser released in association with MoF’s announcement for EoI for Ethio Telecom, the century and quarter telecom monopoly. Ethio Telecom at the time stated that the enterprise’s total equity and liabilities was 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.
Of the stated amount, the current assets were 38.9 billion birr and the remainder 40.9 billion birr was 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 were 27.2 billion birr and 27.3 billion birr respectively.
The balance sheet showed that the mobile network equipment was 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. Moreover, insights showed that it had over 21,000 km of fiber network spread across Ethiopia to which about 85 percent is buried.
As part of breaking up its monopoly hold over the sector, Ethiopia last year also issued a tender to award two licenses to private telecommunication operators.
In late last May, one license was awarded to a consortium led by Kenya’s Safaricom, which offered $850 million and promised to invest $8.5 billion over 10 years.
In related news, last month the Ethiopian Communications Authority (ECA) announced that the process of selecting the second telecom operator had been postponed.

Read more