(Bloomberg) -- Ethiopia suspended the sale of a minority stake in the state-owned telecommunications company, a plan that had attracted interest from investors including Orange SA.
Most Read from Bloomberg
“Given the recent developments and fast-moving macroeconomic changes both globally and from a country perspective, the government of Ethiopia has decided to postpone the privatization process,” the finance ministry said in a statement on Friday.
The decision marks the latest blow to Prime Minister Abiy Ahmed’s much touted plans to privatize large swathes of the country’s economy, in part to reduce national debt and create jobs. The telecommunications sector was intended to be at the forefront of that project, but the sale of two new licenses and a minority stake in Ethio Telecom has faltered amid uncertainty over regulations and a protracted civil war.
While one of the licenses was awarded to a consortium led by Kenya’s Safaricom Ltd. last year, the auction of a second was postponed and then suspended in December, at the request of prospective bidders.
Orange SA of France submitted an expression of interest in buying 40% of Ethio Telecom in July, though the process didn’t advance toward a formal deal.
“Ethiopia believes that taking time to accommodate the improved macroeconomic situation as well as continually improving financial performance of Ethio Telecom will result in better value for all the parties,” according to the statement. “Ethiopia remains committed to finalizing the privatization process and looks forward to re-engaging in due course with existing and additional parties that have expressed interest.”
Safaricom is set to start commercial operations of its license, which is worth about $850 million. The Nairobi-based carrier’s partners include the U.K.’s Vodafone Group Plc and Johannesburg-based Vodacom Group Ltd.
“Last year’s license sale cushioned shortfalls in donor inflows and external lending,” said Connor Vasey, an analyst at Eurasia Group. “If there isn’t something similar in the year ahead then we’ll get an increasingly stretched external balance, more domestic borrowing, and higher inflation. But equally Ethio Telecom is the crown jewel -- it shouldn’t go for cheap.”
Ethiopia has been engulfed in conflict for the past 16 months, triggered by Abiy’s incursion into the northern and dissident Tigray region in response to an attack on a military base. Thousands of people have died and millions are in need of aid.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.