June 18, 2018 / 3:59 PM / 5 months ago

UPDATE 1-Ethiopia plans to split telecoms monopoly in two to spur competition

(Adds details, background)

By Aaron Maasho

ADDIS ABABA, June 18 (Reuters) - Ethiopia plans to sell a 30 to 40 percent stake in its state-run telecoms monopoly to big telecoms companies and will split the company in two to spur competition, Prime Minister Abiy Ahmed said on Monday.

Selling stakes in its lucrative telecoms monopoly and other assets could open Ethiopia, one of the world’s largest untapped markets, to huge potential investments by firms willing to work with a government still wary of private enterprise.

“There will be two telecom corporations and shares will be sold in both,” Abiy said during a question and answer session in parliament. “Somalia, with a population of 12 million, has four telecommunications firms. Ethiopia - with 100 million people - has one. There needs to be competition in the country.”

The stakes in Ethio Telecom will be allocated to firms that are ranked top 10 in the industry globally, Abiy said. South African telecoms groups MTN and Vodacom have both recently expressed interest in Ethiopia and so maybe potential investors.

“There will be one year or two years of intensive study taking place (before the shares of Ethio Telecom are sold),” Abiy said.

The stake sales are part of a raft of measures announced by Abiy, 41, a former army officer who became prime minister in April, saying a new start was necessary to end political instability in a country of 100 million people, where 40 percent are aged under 15.

Foreign companies have been waiting for Ethiopia to open its state monopolies.

MTN told Reuters this month that it was excited by the potential opening up of the Ethiopian market “as it would be a natural fit for MTN’s existing pan-African footprint.”

Vodacom said in a statement at the time: “Vodacom has said on many occasions that Ethiopia is an attractive market so it follows that there would be interest. Naturally this is dependent on what might become available and if it fits within our investment parameters.” (Reporting by Aaron Maasho; Writing by Omar Mohammed; Editing by Susan Fenton)

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