Ethiopia: Ministry Takes First Step to Privatise Telecom

4 October 2019

Mergers, Acquisitions and Financial Results

State Minister for Finance Eyob Tekalign (PhD) gave a press briefing last week about the transaction advisor the Ministry is looking to hire for the partial privatisation of Ethio telecom.

The government took the first step of the partial privatization process of Ethio telecom last week by announcing its search for a company that will consult on the transaction procedures.

To hire a company for the project, the Ministry of Finance has requested expressions of interest from interested bidders who will oversee the process and shepherd it from pre-preparation to final endorsement.

The advisory, which is expected to last for an estimated period of 14 months, will consult on the feasible mode of privatisation, suggest basic terms and conditions of the partial privatisation process, financial and accounting preparation for the pre-privatisation phase and recommend the percentage of capital to be put on sale.

In addition, the consultant will undertake legal due diligence, identify bidder selection criteria, support the bid preparation, as well as assist in partner selection and negotiation.

For the bid evaluation process to select the advisory firm, a five-member committee was formed. The members are composed from the Ministry of Finance, Ethio telecom and the Public Enterprises Holding & Administration Agency, and it will be chaired by Beyene Gebremesqel, director-general of the Agency.

The winning advisory firm that is expected to begin work starting from November 1, 2019, will base its recommendations on the asset evaluation of Ethio telecom, which is currently being conducted by KPMG East Africa.

KPMG East African, based in the Kenya, was hired last August by the state telecom giant for one million dollars and is expected to finalise the asset valuation by the end of October 2019.

The Ministry is also drafting an expression of interest document for an advisor that will oversee the process of letting two international operators join the sector to operate with Ethio telecom.

The two new operators are expected to join the Ethiopian market by the fourth quarter of the new fiscal year and will begin operating simultaneously with the new partially privatised Ethio telecom, according to Eyob Tekalign (PhD), state minister for Finance.

"The privatisation process is neither fast nor slow and is following the intended schedule," said Eyob.

Ahead of opening the sector for foreign investors, the government is working on strengthening the institutional and human capacities of Ethio telecom and other regulatory bodies, according to Eyob.

Before the parliament went for recess, the lawmakers legislated a bill that formed an independent telecom regulatory body, the Ethiopian Communications Authority.

The Authority, which will be mandated with administering, monitoring and enforcing the telecommunications regulations and issuing telecom licenses, received Balcha Reba, former director of the Communication & Information Technology Standardization & Regulation Directorate under the Ministry of Innovation & Technology, as director-general.

Source: Addis Fortune