Ethio-telecom looks past Deloitte’s 80 billion birr asset valuation
Ethio Telecom rejects the Investment Teaser ‘Project Nigat’ Partial Privatization of Ethio Telecom by Deloitte Consulting Limited released on 15 June 2021, which showed the initial asset valuation of Ethio telecom to be about 80 billion birr. “Ethio Telecom’s asset is not just 80 billion birr,” said Firehiwot Tamru, CEO of Ethio telecom whilst speaking about the six month performance of Ethio telecom on January 31, 2022 at Hyatt Regency hotel, as she explained that it is information given by experts and officials that have limited information about the firm.
The document which was prepared by Deloitte Consulting Limited contained selected information regarding a potential investment opportunity in respect to the proposed sale of Ethio Telecom, solely for the informational use of the potential buyer. The company was hired by the Ministry of Finance to consult on the partial privatization of Ethio Telecom after the government decided to sell 40 percent of Ethio Telecom stake to interested international buyers on the way to privatization besides opening up the sector for two more players.
The Investment Teaser ‘Project Nigat’ – Partial Privatization of Ethio Telecom of Deloitte Consulting Limited showed that the valuation of the most profitable public enterprise to be about 80 billion birr. The investment teaser released in association with Mof’s announcement for expression of interest (EOI) for the 40 percent share acquisition of Ethio Telecom on June disclosed that the telecom monopoly had a total equity and liabilities of over 79.8 billion birr.
It is to be recalled that Ethio Telecom had hired KPMG East Africa, for asset valuation of the enterprise, to conduct its business valuation. “Soon we will release our report to the public” said the CEO. “It is a company which makes about 80 billion birr revenue annually, even if our infrastructures are old the company is worth more than 80 billion birr.” Experts in telecom sector explained that matching of the two consulting firms’ valuation may indicate the common value. In the first half of the budget year Ethio telecom has generated a total of 28 billion birr revenue which is 86 percent of the target. This entails a 6.7 percent increment from the previous year similar period. The telecommunications firm has also generated 74.8 million dollar from international business scoring 89.3 percent of its target.
“Given the current challenging environment in our country, this achievement can be considered as remarkable,” said the CEO. The main factor for Ethio Telecom’s underperformance, is the continuing civil war in the Tigray region. Apart from anything else, that means the company has 3,473 base stations out of operation, “resulting in a revenue loss of 3.67 billion birr,” the CEO said.
In the budget year, the telecom operator has offered 23 new and 19 revamped local and international products. In addition to expanding the revenue stream the company has devised cost optimization strategy and managed to save over 1.2 billion birr
“The restoration in those areas where recovery was possible cost us 328.9 million birr, but there are still many woredas [districts] remaining including Tigray region where we cannot provide our services and nor can the conditions and status of our telecom infrastructures be known,” explained the CEO.
The company announced that it has reached 60.8 million users, which is 100% of the expected target and an increase of 20% compared to the same period in 2021. Mobile voice subscribers have reached 58.7 million, Internet subscribers 23.8 million, fixed services have recorded 923,000 subscribers and there are 443,000 fixed broadband subscribers. This represents a telecom density of 58.5%.
Ethio Telecom is currently engaged in various network expansion and telecom infrastructure capacity enhancement projects. The rollout of 4G/LTE has been completed in 136 cities. Telebirr's integration with the banking system is also complete. Ethiopians can already transfer money from eleven banks to their Telebirr account. The reverse process is possible with eight banks. Service outages due to the security, infrastructure and property damage due to security, land acquisition delay, in appropriate compensation request and account suspension, commercial power acquisition delay and interruption, fiber and copper cable cut and vandalism, telecom fraud, are said to be challenges through the first half year.