Orange walks away from Ethio Telecom acquisition

French telecoms operator Orange Group has decided not to buy a minority stake in Ethiopian state-owned operator Ethio Telecom.

"Orange confirms that it has decided to withdraw from the ongoing process regarding the sale of 45% of Ethio Telecom," Orange told Connecting Africa via email.

"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," the telco explained.

In a recent interview with Connecting Africa, CEO of Orange Middle East and Africa, Jérôme Hénique, alluded to the fact that the group was not looking to expand into Ethiopia.

He said the group was always looking out for expansion opportunities in Africa but that at present Orange did not see any projects corresponding to its expansion criteria.

"We look at the large markets, with large demographics where we are not present right now to see if there is opportunity to enter. However, we always have in mind, is there possible value creation? For that, usually we have to be number one or two in the market, or we have to be able to become number one or number two in the market, which is the case in all our markets except one," he explained.

Liberalizing Ethiopia's telecoms sector

Up until recently, only state-owned Ethio Telecom was offering telecoms services in Africa's second-most populous nation.

Back in 2018, the Ethiopian government said it would open the telecom sector to foreign investment and award two new 15-year licenses as well as sell a minority stake in Ethio Telecom.

A consortium led by Kenya's Safaricom was awarded a telecoms license in May 2021, and there is still another telecoms license on offer.

Safaricom Ethiopia began rolling out its network in August 2022, and it officially launched its national network in October 2022 in the capital Addis Ababa and ten other cities.

Ethio Telecom has over 70 million customers in Ethiopia, and Safaricom had reached 4.1 million 90-day active customers at the end of September 2023.

In August 2023, Safaricom launched its mobile financial services platform M-Pesa in Ethiopia to compete with Ethio Telecom's Telebirr service.

Safaricom Ethiopia launched mobile financial services platform M-Pesa in August 2023. (Source: Philip Mostert for Vodafone Group)

The influx of global investment and expertise is expected to significantly boost Ethiopia's telecoms sector and Internet penetration rate for the country's over 120 million citizens.

Ethio Telecom's privatization journey

In June 2021, Ethiopia's government opened the tendering process to private investors for the sale of a 40% stake in Ethio Telecom. At the time, Orange showed interest.

The privatization plans were put on hold in March 2022 and then relaunched in November 2022.

In February 2023, Ethiopia's government decided to sell a bigger portion of Ethio Telecom, upping the stake offered from 40% to 45%.

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Orange, which operates in 17 African nations, once again emerged as an interested buyer, as did UAE-based Etisalat (operating as e&).

In September 2023, Ethio Telecom launched 5G services in the country.

*Top image is of the Ethiopian national flag. (Source: Allexxandar on Freepik)

— Paula Gilbert, Editor, Connecting Africa