Ethio-Telecom to invest in the financial sector

Mobile money within sight

Capital Ethiopia By Muluken Yewondwossen

The Council of Ministers amends the establishment of Ethio Telecom establishment regulation to boost the telecom giant’s operation besides its traditional telecom service. Sources close to the case told Capital that the regulation amendment mainly targets to allow the state telecom operator to invest in the financial sector.

Currently, the government is in the process of partly selling the share of Ethio Telecom to foreign and local investors, while the major share will remain under government control. Experts in the sector said that the Council of Minister’s decision passed on Friday, January 8, would not contradict the process of the partial privatization.

However, some experts argued and expressed their confusion, “Since the enterprise’s 40 percent share would be owned by foreign investors indirectly it will allow foreign companies or individuals to be involved in the financial sector, which is exclusively given for Ethiopians and Ethiopian Diasporas.” A source, which is close to the case, explained that it would not have any effect and the privatization process will be undertaken as per the given schedule.

“The cabinet decision is only amending the regulation that the telecom operators demand to expand its business on other sectors,” an expert who is familiar with the case explained.“Due to that, it will not be related to the privatization process. It will be clear when the privatization process and negotiation are finalized in the future. So far Ethio Telecom is a public enterprise and you may not reject its demand to expand its operation and revenue,” the expert added.

According to experts, there are different legal mechanisms that will be implemented regarding the ownership of operations. It is expected that as per the amended regulation Ethio Telecom will be involved in mobile money. Recently the telecom giant CEO, Frehiwot Tamiru, disclosed that her enterprise has shown interest to involve itself in the financial sector like other telecom companies around the world.

Ethio Telecom had filed its application to the National Bank of Ethiopia, a financial firms’ regulatory body, to launch a mobile banking service in the country. The CEO disclosed that the regulatory body has given a green light to commence business on the new segment for one of the oldest enterprises in Ethiopia.

Currently, the privatization process is in the initial bid process for interested international investors for the 40 percent share. Deloitte was hired by the Ministry of Finance as a transaction advisor besides undertaking detailed due diligence, business valuation, tender document valuation, and others.

The existing regulation that was amended in 2011 allowed the telecom operator to provide and make accessible next-generation network-based world-class standard information technology services; to engage, in accordance with development policies and priorities of the government, in the construction, operation, maintenance, and expansion of telecommunications networks and services; and to provide domestic and international voice, data, video, and other related value-added services.

The statement that the Council of Ministers passed on Friday afternoon explained that the regulation is amended with the aim to abide by Ethio Telecom with the industry’s fast development and dynamic circumstance and provides additional and related services by using its infrastructure.
Capital’s effort to contact Frehiwot Tamiru for further information was not fruitful.