Deloitte beats rivals to win Ethio Telecom privatisation project

As Ethio Telecom continues its partial privatisation process, Deloitte has been brought on board as the transaction advisor for the deal. The firm beat several rivals to secure the engagement.

The government announced the 40% privatisation of Ethio Telecom last year, amid a sea of other economic reforms aimed at opening Ethiopia’s market up to private investment. At the time, KPMG was brought on board for asset valuation, while a bid was put out for a transaction advisory firm.

KPMG was out of contention for this role, while Deloitte, PwC, EY, Roland Berger, BDO and Goldman Sachs all came forward with bids. Deloitte has now won out after a prolonged selection process, and the advisory firm is now gearing up to sell off 40% of one of Africa’s last remaining public sector telecom companies.

Deloitte’s role will be to secure the best deal possible for Ethio Telecom, while it reportedly sells a significant stake of the company to a global telecom player. The move is expected to increase profitability at Ethio Telecom, and make it competitive in an increasingly vibrant telecom market across Africa.

Ethio Telecom is already among the largest telecom players from a regional perspective, and the government-owned entity has been making significant investments in further growing its operations recently. Vendor finance initiatives and other investments have taken the company’s subscribers into the millions.

In fact, Ethio Telecom had well over 40 million subscribers last year, which is not only just short of half the country’s population, but is also significantly higher than the 30 million plus subscriber base of its cross-border counterpart Safaricom in Kenya. Despite the gap in subscribers, Safaricom generated more than $2 billion in revenues last year, which is more than double the amount generated by Ethio Telecom.

The move to partially privatise is aimed at addressing this profitability shortfall, and put Ethiopia on track to becoming a digital leader on the continent. As the East African market grows increasingly competitive, the region has become an appealing market for foreign investors, which should draw significant interest towards the latest divestment.