Historic Milestone Sees Ethio Telecom Unveil 100 Million Shares

In a historic milestone for Ethiopia’s capital market landscape, the formerly fully state-owned telecom has unveiled 100 million shares to the public in the country’s first initial public offering.

During this initial round, 100 million ordinary shares, each priced at 300 birr, have been made available for purchase in a highly anticipated event attended by Prime Minister Abiy.

Ethiopian citizens and eligible investors can become shareholders by purchasing a minimum of 33 shares (9,900 birr) and up to a maximum of 3,333 shares (999,900 birr).

In addition to the share price, buyers will incur a 1.5% service fee and value-added tax. The share sale runs from October 16, 2024, to January 3, 2025.

According to the Ethiopian Securities Exchange, Ethio Telecom shares were not expected to take place on the ESX trading platform. Instead, similar to any initial public offering conducted by local share companies, shares that will be listed on ESX will have to be initially subscribed to by investors.

After Ethio Telecom shares are listed on the ESX, investors will be able to trade their shares in a secure, transparent, and regulated environment.

Ethio Telecom, with 79 million subscribers and 50 million mobile money users, has set an ambitious revenue target, aiming for a 75% increase to reach 163.7 billion birr ($1.1 billion) by 2024/25. Last year, the state-owned operator generated 93 billion birr in revenue.

Exactly a year ago, the National Bank of Ethiopia (NBE) revised its Payment Instrument Issuer Directive, paving the way for mobile money platforms to offer services related to investing in securities.

According to the directive, mobile money platforms, with written approval from the National Bank, can facilitate their users’s investment in government and private securities electronically.

Last week it was reported that Ethio Telecom received a broker license from the Capital Markets Authority, which enabled the company to sell its ten percent stake directly to local investors.

The move to sell the shares to local investors was pursued after the government failed to attract buyers for its initial plan of selling 45% of Ethio Telecom.

Ethiopia first initiated the tendering process for a 40% stake in Ethio Telecom in June 2021, but economic conditions led to a postponement in March 2022. The process was subsequently revived in November 2022, with an increased stake offering announced in February.

Reportedly, Emirates Telecommunications Group and France’s Orange were exploring bids for the stake in Ethiopia's 130-year-old telecom operator. France’s telecom giant Orange opted to withdraw from the bidding process to acquire a potential 45% stake in Ethio Telecom, reported Reuters in November 2023.

Before applying for the share sale, interested citizens must be an Ethiopian citizen, register and create an account on the designated platform, provide a valid identification document, hold a legal power of attorney if applying on behalf of someone else, be a telebirr SuperApp user, and review the company's information and risk analysis in the prospectus. Afterward, they must accurately complete the share purchase application on the telebirr SuperApp and finalize the payment within 48 hours.

“While Ethio Telecom’s primary offering is fully dedicated to retail investors and being implemented in an electronic manner, it should be clear that not all offerings are similar. Going forward and with the development of our capital markets, we will see increasing role to be played by institutional investors (i.e. investment banks that underwrite securities, pension funds, mutual funds, asset managers, high net worth individuals and foreign investors,)” stated The Ethiopian Securities Exchange (ESX) in a press release.