French Telecom Orange opts out of acquiring stake in Ethio Telecom

FILE PHOTO: Ethio Telecom employees work inside their call centre in the Bole neighborhood branch in Addis Ababa, Ethiopia July 29, 2022. REUTERS/Tiksa Negeri/File Photo
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French telecommunications company Orange (ORAN.PA) has pulled out of the bidding process to acquire a 45% stake in Ethiopian operator Ethio Telecom.

In 2021, Orange expressed its interest in participating in the partial privatization of Ethio Telecom, boasting over 70 million subscribers, one of Africa’s largest telecom networks.

In a statement given to Reuter’s news, “Orange affirms its decision to withdraw from the current process related to the sale of a 45% stake in Ethio Telecom.”

The French company stated, “After analysis, the Orange group believes conditions do not allow for the rapid deployment of our strategy and the completion of a project that would create value for the company.”

The intention to divest a portion of Ethio Telecom has been in progress since 2018, forming a crucial aspect of broader initiatives to dismantle the once state-controlled monopoly. Subsequently, the government has granted its initial private license to Safaricom and is currently considering the possibility of introducing a third player into this sector.

Two years ago, Orange expressed interest in acquiring a minority stake in Ethio Telecom when the country first initiated privatization plans. However, economic conditions led the government to postpone the move a year later, before eventually revisiting the plan.

In July 2023, Bloomberg reported that both Orange and UAE-operator e& were independently contemplating bids for a 45 percent stake. At that time, an Orange representative emphasized the company’s clear interest in Ethiopia, citing its presence in Africa and recognizing the continent’s growth as an integral part of its strategy.

It’s worth noting that Ethiopia’s government has taken significant steps to open the market to international players. This included the awarding of the country’s first ever private mobile network license in 2021 to a consortium comprising Vodafone Group, Vodacom, and Safaricom for a price tag of nearly $1 billion.

Ethiopia’s growing telecom sector has potential to attract foreign buyers. But the country’s macroeconomic condition, especially a constrained foreign exchange market dissuades foreign investors. This is hampering plans to privatize some state-owned enterprises. It remains to be seen whether the government will float another bit for Ethio-Telecom next year.

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