Grace Ashiru
Ethiopia has excluded diaspora citizens and foreign nationals from participating in its first-ever public offering (IPO) of Ethio Telecom, the state-owned telecom company that holds 95% of the market share. The Ethiopian Securities Exchange (ESX), the country’s first bourse, is expected to commence operations this month.
The government aims to generate $255 million by selling a 10% stake in the telecom giant through Ethiopian Investment Holdings (EIH). However, the exclusion of diaspora and foreign investors from the IPO could potentially hinder Ethiopia’s efforts to develop open capital markets, a key element of Prime Minister Abiy Ahmed’s plan to liberalize the financial sector and modernize the economy.
“The offer is being extended only to Ethiopian citizens physically present within Ethiopia. It is not available to individuals or entities in other jurisdictions outside Ethiopia,” Ethio Telecom detailed in its investor prospectus.
Ethio Telecom did not immediately provide a response to a request for comment. A capital markets expert shared with TechCabal that Ethiopia might restrict the participation of foreign investors in the telecom sector, which the country still views as critical and strategic, despite opening up for foreign capital.
For many years, Ethio Telecom held a monopoly in the country’s telecommunications market until a Safaricom-led consortium began operations in 2022. This development was intended to liberalize the telecom sector and enhance service access in remote areas.
“Even with Safaricom’s entry, Ethio Telecom remains the leading provider in the Ethiopian telecom market, holding an estimated 94.5% of subscriber market share as of June 30, 2024, owing to high customer satisfaction and the wide availability of high-quality services and products across the nation,” Ethio Telecom stated.
Additionally, the Ethiopian sovereign wealth fund, EIH, is planning to list ten of its largest investments, including the Ethiopian Shipping and Logistics Services and the Ethiopian Insurance Corporation.
In April 2024, ESX revealed that it had secured $26.6 million in funding from investors to support the launch of its bourse, which is anticipated to list more than 10 companies by the end of 2025. The bourse is expected to draw foreign investments in sectors such as insurance, banking, and telecommunications, which are currently under state control.
The Nigerian Exchange Group (NGX) holds a 5% stake and stands as one of the leading institutional investors in the bourse. Other prominent investors include FSD Africa, a UK-based non-profit financial institution, and the Trade and Development Bank Group (TDB), the financial branch of the COMESA trade bloc.
