More Africa NewsEthio telecom ready to acquire equity from African telecom companies

August 1, 2022by myles0

Ethio Telecom completes the steps necessary to buy equity in telecom firms doing business in Africa.

Ahead of the 2022/23 Ethiopian fiscal years, Ethio Telecom has completed preparations to expand its operations to global markets.

The company will primarily expand into African markets, according to Frehiwot Tamiru, CEO of ethio telecom, who declined to name the countries.

The state-run behemoth has already chosen which countries it would penetrate and has conducted research to find businesses that can help ethio telecom become competitive internationally.

The telecom giant will not just be restricted to serve the local market like it is now. Prior to Frehiwot taking office, the telecom firm had no intentions to go global, despite one of its aims being to become the most affluent telecom operator in Africa.

“”Investing in shares and obtaining stock in other telecom firms is our area of interest as we have a number of competitive advantages compared to other telecom firms,” Frehiwot told The Reporter.

Along with a strategy to enter new markets through African operators, the telecom operator’s managers are also considering managing other telecom firms.

“The main strategy is to use investments made abroad to generate foreign currency. African telecom markets will be our primary emphasis,” the CEO said.

Some operators have already contacted ethio Telecom about acquisition, according to Frehiwot.

“Some foreign companies want us to acquire their company fully. However, we want to invest in them, acquire shares, and profit from them,” she told The Reporter.

Products from Telebirr are also expected to be introduced internationally.

Although the corporation initially intended for its international investments to begin in 2021/22, this was unable to happen because the priority was rebuilding the infrastructure that had been damaged by the conflict in Ethiopia, which also required a significant amount of resources.

About 3,473 of its telecom infrastructure sites sustained damages during the recently concluded fiscal year as a result of the unrest in the nation, and 1,144 of those sites are still inoperable.

The company decided to postpone its international expansion plans until the 2022/23 fiscal year, according to Frehiwot.

“We might begin in 2021/22 since we have been working hard to repair our infrastructure after the war. These initiatives are postponed till this year (2021/22),” she said.  

According to a proclamation that was adopted in February 2021 and re-established ethio Telecom with 400 billion birr in paid-up capital, the company is allowed to “participate in any equity investment domestically and at international level.”

For Telebirr, however, the method of traveling outside is unclear because the National Bank of Ethiopia (NBE) Payment Instrument Issuer directive is silent on the matter.

“Telebirr is nearly regarded as a financial institution,” said an official of the NBE, “but there is no explicit law regarding the liberalization of overseas accounts.”

On the other hand, the state-owned giant is also thinking about welcoming overseas partners that wish to go to Ethiopia and work with ethio telecom.

Businesses from Europe have been contacting officials of ethio telecom since last year for possible partnership agreement.

“Typically, we don’t recognize our own strength. I just returned from the North Africa Telecom Summit. They are taken aback by our performance and are interested in coming and making investments here,” Frehiwot said.

The success of ethio telecom also astounded AfDB, she continued. Ethio telecom was the second-largest operator out of 195 African operators and rated 26th overall out of 778 companies, according to GSMA.

As of June 2022, it has 66.5 million customers, an increase of 18.4 percent from the previous year. There are 144 products available right now.

It generated 61.3 billion birr in revenue in the just finished fiscal year, which is 8.5 percent more than the previous year but 12 percent behind its annual plan due to the strife in the nation.

According to its annual report, which was delivered on July 28, 2022, at the Elily Hotel, its Earnings before Interest, Taxes, Depreciation and Amortization (EBTDA) was 60.4 percent.

The annual service export revenue for ethio Telecom was USD 146.6 million, or 82 percent of the projected amount.

Remittances contributed almost USD one million to Telebirr’s revenue during the just-ended fiscal year. However, the company made USD 146.6 million in service exports that year.

The meager foreign exchange earned also falls well short of what ethio telecom needs to invest in expansions in order to compete with Safaricom, which is set to begin operations this August.

“We are spending a lot of money, mostly on equipment imports using foreign exchange. However, the increasing devaluation of the birr in Ethiopia is driving up our expenses in birr,” said Frehiwot.

Source: The Reporter Ethiopia

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