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The move is set to bring increased private investment to the country
Ethiopia is set for the historic launch of its first stock exchange this week, the Ethiopian Securities Exchange (ESX). The first listing will be operator Ethio Telecom, the country’s largest telco, which will sell a 10% stake this week.
The move is part of Prime Minister Abiy Ahmed’s plans to open up the country – which is heavily controlled by the state – to more private investment. Ethio Telecom’s listing represents the first major step in this plan. The government has also announced plans to divest a further 45% stake in Ethio Telecom to investors in the future.
With over 70 million subscribers, Ethio Telecom is a key player in Ethiopia’s digital transformation. The company’s partial privatisation is anticipated to enhance competition, improve service quality, and drive innovation within the telecom sector.
“This is something that we have to look into after the 10% sale, because that will give us a sense of valuation,” said Brook Taye, the CEO of the telco’s owner Ethiopia Investment Holdings, speaking to Reuters.
Historically, Ethiopia did not have a stock exchange due to its state-led economic model, which focused on government control over key sectors and limited private sector participation. The absence of a stock exchange meant that businesses had fewer avenues to raise capital, and investors had limited opportunities to invest in local companies. The establishment of the ESX marks a significant shift towards a more market-oriented economy, aiming to attract investment, enhance transparency, and drive sustainable growth.
Ethiopia’s telecom sector has been dominated by Ethio Telecom for many years as a state-controlled monopoly, but this is now changing as the government opens the market to competition. A major step was the entry of Safaricom Ethiopia, the first private telecom operator in the country. The company was awarded a license in 2021 for $850 million, allowing it to compete directly with Ethio Telecom.
Safaricom launched services in 2022 and is expected to introduce mobile money through its popular service, M-Pesa, which could significantly improve financial access in Ethiopia. The competition from Safaricom has already led to better pricing and expanded services, pushing Ethio Telecom to improve its offerings.
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