French telecommunications giant Orange has withdrawn its bid to acquire a minority stake in Ethiopia's state-owned telecom firm Ethio Telecom, dealing a setback to the country's plans to partially privatize the monopoly phone operator.
In a statement seen by Reuters on Monday, Orange said it had decided to end its participation in the tender process to buy a 45% stake in Ethio Telecom, citing unfavorable deal conditions. The company said an analysis determined that "the conditions do not allow for the rapid deployment of our strategy and the completion of a project that would create value for the company."
Orange had submitted an initial expression of interest last year to invest in Ethio Telecom, which has a mobile subscriber base of over 70 million people in the East African nation of about 120 million. Ethiopia's officials at the time welcomed Orange's bid, highlighting the attractiveness of gaining access to Ethiopia's large and growing telecom market.
However, negotiations apparently hit roadblocks, with Orange ultimately deciding the proposed terms would not deliver promised returns within an acceptable timeframe. Neither Ethio Telecom nor Ethiopia's Finance Ministry, which is overseeing the privatization process, have released public statements on Orange's withdrawal so far.
The partial sell-off of Ethio Telecom was a centerpiece of economic reforms introduced by Prime Minister Abiy Ahmed since he took office in 2018. His government aimed to attract foreign capital and expertise to develop Ethiopia's telecom infrastructure and boost access to fast internet across the country.
Orange's exit is a setback that could dampen interest from other foreign bidders. How Ethiopia addresses issues like ensuring a profitable market structure, improving governance at Ethio Telecom and easing regulatory constraints will be crucial to resuscitating the long-gestating privatization effort.
Ethiopia's recent plans to introduce further competition also have suffered another setback with no viable bids submitted for the country's second telecom license.
The government had hoped an open bidding process would attract interest in establishing a second network to challenge the dominance of state-owned Ethio Telecom and the late entrant, Safaricom Ethiopia. However, according to local reports, no qualifying bids were received ahead of the recent deadline.
Ethiopia had opened the telecom market to competition in 2021, awarding a license to Safaricom Ethiopia for $850 million. However, the newcomer has so far only amassed around four million subscribers, a negligible portion of Ethio Telecom's over 70 million users.