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Orange backs away from Ethiopia

Orange has pulled out of the contest to acquire a stake in Ethio Telecom, essentially claiming that the conditions are not right.

Mary Lennighan

November 29, 2023

2 Min Read
Orange

The French operator group was one of the most highly tipped candidates to pick up the 45% stake in the Ethiopian telecoms incumbent that the state has been trying to sell for some time. But more than two years after it first confirmed its participation in the privatisation process, Orange is walking away.

"Orange confirms that it has decided to withdraw from the ongoing process regarding the sale of 45% of Ethio Telecom," the telco said, in a statement. "After analysis, the Group believes that the conditions do not allow for the rapid deployment of our strategy and the completion of a project that would create value for the company."

It's not giving a lot away with regard to the results of its analysis, but it's pretty clear that Ethiopia – be it due to the conditions of the stake sale itself, or the broader market conditions – is not the telecoms land of plenty that it was once considered.

When Orange formally declared its interest in Ethio Telecom in mid-2021, the incumbent still effectively had a monopoly and the growth opportunity was considerable. The government had just offloaded its first private operating licence to a consortium headed by Safaricom, but the newcomer had yet to launch. Safaricom was also barred from offering mobile money services – something that doubtless put Orange off participating in the licensing process – leaving the way clear for Ethio Telecom to capitalise on the demand for both mobile and financial services.

It took Safaricom almost 18 months to launch services, by which time Ethio Telecom had had something of a growth spurt, growing customers and revenues, and experiencing early success with its Telebirr mobile money service. The government has since lifted the restriction on mobile money services, incidentally, meaning Safaricom was able to roll out M-Pesa in August.

But although Ethio Telecom no longer has things all its own way in the market it remains the strongest player of the two by some margin. It's numbers have been strong and on paper it looks like a decent prospect for a would-be investor. But naturally Orange is privy to the finer details of the terms of the sale, and clearly something doesn't stack up.

That's not to say all other potential investors will feel the same, of course. E&, the ambitious incumbent from the UAE, has been named as a likely candidate, as has Veon. The Ethiopian Communications Authority is pushing on with the award of the second private licence – although there has been no update since it pushed back its deadline for responses to its RFQ to early October – but we haven't heard much from the government on the privatisation process for a while.

For now, all we know is that whenever the Ethio Telecom sale happens, Orange will not be a part of it.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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