For the first time in its 130-year history, Ethio Telecom is opening its doors to the public, offering a rare chance for local investors to own a part of Ethiopia's telecommunications giant.
. . .
Ethio Telecom has been one of the oldest communication corporations in Africa dating back to 1894. It has been a state-owned corporation ever since its establishment. But now that is going to change. Ethio Telecom has offered local investors a chance to participate. That is right. Ethio Telecom now offers its 10% stake via tele-birr through a public offering. The sale, which will last from October 16, 2024 to January 3, 2025, debuted at a price of ETB 300 per share, where investors can buy a minimum of 33 shares (ETB 9,900) and a maximum of 3,333 shares (ETB 999,900).
What is a public offering?
A public offering is when a company offers parts of its shares or other financial instruments such as bonds to raise its capital. Public offerings are not limited to start-up companies. Some of the biggest public offerings come from a multi-billion dollar organization that has been around for decades. These IPOs are made for opening opportunities for growth in the early stages of business, it is also useful for business expansion, debt reduction, or other corporate purposes. And some IPOs can create a great deal of returns for investors.
Companies like Coca-Cola have also done this. In 1919, the company was purchased for $25 million. Later that year it officially made its public offering on the New York Stock Exchange, for $40 per share. As of the 2016 annual year, the shares have risen and the market’s capitalization by the end of 2015 the value of an individual share bought in 1919, with dividends reinvested was $12,748,802.
Other well-known companies such as Alibaba Group Holding, Visa, Meta platforms, and Uber Technologies can be mentioned as well. Alibaba at the time of its IPO had a market value of $169.4 Billion which was later raised the amount of $25.03 billion. Visa had a market value of $44.32 billion and it raised $19.65 billion. As these numbers show, IPOs provide an effective way for companies to raise capital while offering investors a promising opportunity to invest in growth and potential returns.
However, investing in IPOs isn’t a foolproof method of wealth creation. There are as many failures of IPOs as there are successes. Much like any other investment, IPOs are a mix of risks and rewards. Market volatility, changes in regulation, or company performance can all affect the returns. Investors should approach with both enthusiasm and caution.
How can this be useful for our country?
Ethio Telecom has over 78 million subscribers as reported this year and is planning to generate over 163 billion birr in revenue during this fiscal year. It also has plans to increase the number of subscribers to over 83 million by the end of this fiscal year. If the planned revenue is achieved, it will be nearly around 25 percent of the country’s government budget. It has also gained recognition in an event organized for “Honest taxpayers.” It has paid 27.2 billion birr in taxes to the government. The company announced that it has paid over 120 billion birr in taxes over the past six years.
As part of Ethiopia’s ongoing economic reforms, Ethio Telecom is opening its doors to local investors, signaling a likely boost in its financial performance over the coming years. This move aligns with the government's broader plan to gradually introduce private participation into state-owned enterprises. By rolling out services like Telebirr, Ethio Telecom is not just modernizing but also aiming to play a bigger role in strengthening the economy, though time will tell if these efforts hit the mark or just scratch the surface.
