Modest response to landmark Ethio Telecom IPO

Quite a few weeks after Ethiopia’s maiden initial public offering (IPO) closed, Ethio Telecom has revealed how many of the company’s shares were actually sold of the 100 million on offer – and it seems the total was very modest indeed.

According to Bloomberg, Ethiopia raised ETB3.2 billion ($24.2 million) after selling a little over 10% of the shares on offer in a maiden IPO that was open for more than four months; it began on 16 October 2024 and closed on 14 February this year.

More precisely, the country sold 10.7 million shares in state-run Ethio Telecom for ETB300 (about US$2.27) each, according to a company statement late last week.

Ethiopia Investment Holdings, which controls 40 state-run companies including Ethio Telecom, had hoped to sell the entire 100 million shares, which would have netted ETB30 billion (about $US227million). The fact that it didn’t was put down to restrictions on the IPO.

Ethio Telecom Chief Executive Officer Frehiwot Tamru explained that the offer failed to raise the targeted amount because the Ethiopian diaspora and institutional investors weren’t allowed to bid. Some investors may also have been put off by the ETB 1million (about US$7,570) limit on shares that any individual investor could buy.

A second round is expected but the Ethio Telecom CEO was unable to say when, simply noting: “Regarding shares that are not subscribed, we will notify when we will be doing a second round IPO.”

However, as Reuters points out, the IPO is part of the government’s broader plan to expand private investment in the Ethiopian economy and this sale paves the way for the operationalisation of the Ethiopian Securities Exchange. The country last had a stock market in 1974, before the military overthrow of Haile Selassie.

Reuters adds that the nation last year ended half a century of control of its currency and is easing the rules of doing business to lure investment.

Ethio Telecom, meanwhile, seems to be doing well. It had about 81 million users by January and reported revenue of ETB61.9 billion (about US$463.3 million in the six months up to 7 January.