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Deloitte to Advice Ethio telecom on Privatisation

Deloitte to Advice Ethio telecom on Privatisation

One of Ethiopia’s long awaited privatisation initiatives – the partial privatisation of ethio-telecom – is moving a step forward and Deloitte & Touch has been awarded the task of transaction advisory, it was learnt.

The multinational is set to be the Transaction Advisor to the Government of Ethiopia for the Process of Partial Privatisation of Ethio Telecom as 40 percent of the company is to be sold off to an international telecom operator with the aim of transforming the sector transition into a world class operator, The Reporter has learnt.

The bid had all the BIG 4 (Deloitte, EY, pwc) except KPMG which was not allowed to bid, as they are currently doing an Asset valuation exercise for the same telecom operator. The other bidders included Roland Berger, BDO, and Goldman Sachs.

Ethiopia and Eritrea are said to be the only two countries that have not liberalised their telecom sector. Over the last fifteen years the government of Ethiopia has invested significantly through vendor finance creating one of the largest telecom operators in Africa.

Last year's report showed Ethio telecom had over 43million subscribers out of a population of 110 million people, generating approximately 1 billion USD in revenue. By comparison, one of the largest telecom operators in the region operating across the border, Safaricom of Kenya had a customer base of 33million out of a potential 50mill ppl generating $2.4bln in the same year.

While Ethio telecom has significantly improved its services over the last few years, it is no wonder the government sees the potential revenue & profit growth as one of its key drivers for privatising ethio telecom. Last year’s result shows Safaricom generated twice as much revenue as Ethio telecom with fewer customers.

The benefits to the government of transforming the telecom sector by selling 40% stake is to generate more dividend as opposed to the 100% stake it has now, significantly increasing tax collection on the larger profit, and finally transforming the digital economy which could end up creating significant more opportunities with the latest digital transformation strategy for Ethiopia which was launched earlier this year.