Ethiopia’s state-owned Ethio Telecom records lackluster IPO

The poor IPO showing follows earlier failures by Ethio Telecom to attract foreign investors: French-owned Orange and Emirates Telecommunication Group both pulled out midway into negotiations with the government.

The Ethiopian government had intended to sell 40% of its shares in Ethio Telecom. It has also been in negotiation with the African Development Bank to help finance digital growth. In January, Ethiopia launched its first securities exchange in five decades.

With nearly 80 million customers, Ethio Telecom has the highest number of subscribers in one African country.

This new development comes at a difficult moment for the federal government as its effort to liberalize key economic sectors, including telecommunication and banking, appears to be generating minimal interest from both local and international investors.

Ethio Telecom, one of Ethiopia’s most profitable government-owned enterprises along with Ethiopian Airlines, previously had a monopoly on the local market. But it is now facing competition from Kenya’s Safaricom and potentially others if the country eventually licenses other players.

While Safaricom became Ethiopia’s first privately-owned telecom company, it has not had an easy run. There have been claims that it has been penalized by the regulator’s favoritism toward the state-owned enterprise while also being unable to expand its services in certain regions due to the recurring conflicts that have engulfed the Horn of Africa nation.

Despite liberalizing key sectors of the economy, floating the local currency, and negotiating billions of dollars in conditional loans from the IMF, Addis Ababa continues to struggle with high inflation and lukewarm interest from foreign investors.