🎒 Ethio Telecom Packs Its Bags

Welcome to the 71st edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• 📞 From Saudi to South Sudan? Ethio Telecom’s Next Call

• 🧱 Portfolio Building Blocks: The Core Ingredients With 🫵 in Mind

• 🗝️ The Key Takeaways

Thanks for reading!

The Double Life of Ethio Telecom’s Monopoly

Telecom

Ethio Telecom has spent years as Ethiopia’s unchallenged telecom provider. Decades in fact. Forever even.

ሞኖፖሊ. Not the game, the very definition.

After all, they deliver mobile, broadband, and mobile money services under state control. With soaring profits, growing customer numbers, and a strategic plan in hand, it seems Ethio Telecom is no longer strictly about defending its kingdom, recently flashing its eyes softly at new frontiers.

At the same time, Safaricom spent nearly a billion dollars trying to break in the Ethiopian market, only to find bureaucracy standing in its path.

Will Ethio Telecom face the same fate?

By the Numbers

Here’s the scoop on our national carrier:

• Pretax profits surged by 81 % in the year ending June 2025, reaching around 76 billion birr (about $550 million). 

• Total number of subscribers rose 6.3% to 83.2 million during the year, while subscribers to its financial service Telebirr increased 15.3% to 54.8 million

• Revenue is forecasted to jump by 45.5 % through June 2026, driven by more customers and higher usage of its mobile money platform Telebirr. 

• Subscriber base is expected to grow by roughly 6% next year, bringing total users to around 88 million. Telebirr users, and by extension those sending money via mobile, are projected to rise by about 14%. 

• A modest IPO brought in 3.2 billion birr (about $24 million) by selling 10.7% of offered shares. Not a windfall. 

• The “Next Horizon: Digital and Beyond” strategy outlines a three‑year roadmap (2025–2028), positioning Ethio Telecom for broader digital ambitions and regional growth. 

Flashback: Safaricom’s Pricey Entry

Let’s talk about what it cost Safaricom to enter the Ethiopian market:

• $850 million for the telecom license: In 2021, a consortium led by Safaricom paid USD 850 million for Ethiopia’s telecom operating licence

• Another $150 million for the mobile money ticket: When Safaricom moved to launch its M‑Pesa platform, the central bank demanded an additional USD 150 million, on top of around ETB 50 million in paid‑up capital. 

• Complex bureaucracy and delayed incentives: Safaricom faced delays launching M-Pesa. Now, if we were skeptics, we’d say it was to give Telebirr a proper head start eating the እንጀራ (And skeptics we are!).
  They also faced delays getting equipment through customs and initially lacked promised tax breaks and import duty waivers. 

• Break-even still years out: Safaricom Ethiopia is only expected to break even in 2026. Early losses have weighed on the parent company’s earnings. 

The other subtle edge? Infrastructure. Safaricom leases from Ethio Telecom where it makes sense to the national carrier, and Ethio Telecom happily books this revenue. In fact their own prospectus mentions infrastructure-sharing income, and earlier reporting pegged hundreds of millions of birr in such revenue in prior periods.

In short: the incumbent gets to charge rent while the rival builds out and their equipment gets all sorts of held up. Sort of like playing both the referee and striker at the same time.

Not to mention other passive aggressive moves: fuel payments and government services (including taxes) cannot be made using M-Pesa.

So after laying down nearly a billion dollars plus in fees, Safaricom is fighting red tape and policy shifts.

Not the welcoming hospitality we Ethiopians are associated with.

Telebirr and STC Pay: The Gentle Dip into Regional Markets

Ethio Telecom is taking a much lighter approach to expansion. Recently, executives welcomed leaders from Saudi Telecom Company (STC) in Addis to explore linking Telebirr with STC Pay, with the goal to make cross-border money transfers and digital payments smoother.

This plan is less about building from scratch and more about smart collaboration. If Telebirr gains traction in Saudi Arabia, that’s a huge remittance corridor and brand boost without building a whole new operation from scratch.

So why look abroad now? Because Ethio has momentum at home and a mobile money platform with real usage. Going regional secures foreign currency, diversifies risk, and creates leverage in vendor talks. A friendly partnership such as that with STC in Saudi Arabia would be far cheaper than bidding for a full license anywhere.

Any Other Markets on the Horizon?

Let’s assume Ethio Telecom wants to spread their wings, and possibly navigate the very hurdles it put up on Safaricom.

If you’re Ethio Telecom and you’d hired a consultant to research markets to cut your regional teeth on, South Sudan would probably tick a few boxes:

✅ Close to home
✅ Very low mobile and internet penetration
✅ Lots of room to grow

As of early 2024, internet penetration was roughly 12% and mobile connections equaled about 36% of the population. Lots of headroom everywhere you look.

The flip side: struggling but entrenched competition (MTN, Zain), costs in US dollars, and political risk that can quickly turn a rollout into a rescue mission. It’s an opportunity, but one that demands patience, partnerships, and a war-chest.

Ethio Telecom could treat such markets like pilot zones, starting with partnerships or managed services. A low-stakes entry could pay dividends in brand value and partnerships with continental giants such as MTN could enhance their capability in its home market.

Quick Stats Recap

• Pretax profit up 81% (~76 billion birr)

• Revenue to grow another 45.5% in 2026

• 6% subscriber growth expected next year; 14% Telebirr growth

• IPO raised 3.2 billion birr (10.7% sold)

• $850 million telecom licence fee paid by Safaricom; $150 million M-Pesa mobile money licence fee

• Safaricom break-even projected by 2026

 Key Takeaways

1. Ethio Telecom is confident but cautious: With clean financial growth and an IPO test run, it’s positioning itself for more.

2. Mutually beneficial partnerships, not costly bells and whistles: Pursuing alliances like Telebirr–STC Pay is a lower-risk, higher-reward model.

3. Safaricom’s uphill battle highlights Ethio’s home advantage: The competitor paid dearly and stumbled through red tape. Ethio Telecom, meanwhile, strengthens home advantage while testing overseas options.

4. Potential impact back home: If Ethio Telecom expands smartly, it could reinvest gains locally, advocate for fairer policies, and sharpen services for customers who’ve waited long for modernization.

ፍራንክ Picks 

🚶🏽 Event: Ethiopia Auto & Motor Expo [ Sep 24 - 27, Exhibition Center ]

🗞️ In the news: Institutional investing and private funds get their first rules

♟️ Innovation: Ethio Telecom offers streaming services through IGADO+

Cooking A Perfect Investment Portfolio

Economy

You know how your favorite ሽሮ tastes best when perfectly seasoned, not just salty or spicy alone? A diversified portfolio works the same, balance is everything. Here’s the no-nonsense on building the perfect portfolio.

Step One: Know You 💅

No cookie-cutter solutions here—your investment playbook should reflect:

• Career stage: Just starting out or retiring soon?

• Income level: Living paycheck to paycheck or stacking up funds?

• Lock-in tolerance: Can your money sit tight for weeks, months or years?

• Risk appetite: Brave thrill-seeker or safety-first kind of person?

Once those are clear, you can choose a style:

• Growth (Aggressive) – for the bold at heart.

• Moderate (Balanced) – the “just-right” zone.

• Quality (Conservative) – calm, steady, dependable.

But no matter your flavor, a well-balanced portfolio should include a mix of stocks, bonds, and mutual funds (collective investment schemes). Let’s unpack what those mean.

Stocks: The Exciting Ride 🚀

Buying stock is like owning a slice of a company. If the company scores big, you could see your share price grow and—bonus—earn dividends. But if the company stumbles, well… your share price might shrink, or even vanish. High risk, yes—but also high reward potential.

Bonds: The Safety Net 🤝🏻

Bonds are basically IOUs from governments or companies. You lend money, and they pay you back with interest (called a coupon, not the one for discounts). Lower risk than stocks and more predictable—but still not totally foolproof. If the issuer goes under, bondholders get front-of-the-line treatment—so you're safer than stock owners.

Mutual Funds (CIS): The Investment Buffet 💰

Think of collective investment schemes like a communal fund pot. Everyone chips in and a professional mixes in stocks, bonds, or focus in a sector like real estate and technology. You don’t own the individual assets, but you own a piece of the fund.

Why CIS are awesome:

• Diversification: your money is spread across many options, not just one.

• Professional management: hands-on from people who know what they’re doing.

Fees and commissions apply, of course. But they're managed by professionals. However, they also tend to have certain barrier to entry rules like minimum investment and holding periods.

Hot Out Of The Microwave ♨️

Here’s the exciting part, the Ethiopian Capital Market Authority (ECMA) just dropped a draft directive filled with investor-friendly upgrades to Collective Investment Schemes:

• Types of CIS Defined: From public money-market funds, mutual funds, real estate investment funds (REITs). They’ve got categories for almost every flavor

• Clear Legal Structures: CIS must be registered as a Share Company, Private Limited Company (PLC), Limited Partnership, or an Investment Company recognized by ECMA

• Service Providers Required: Every scheme needs a licensed Operator, Custodian, and appropriate professional parties. Think auditors, advisors, shariah watchers if needed

• Rock-Solid Investment Policy: Not a vague anything-goes plan. Each fund must clearly outline objectives, asset allocation, diversification thresholds, and borrowing limits. Any changes require two-thirds investor approval

• Portfolios with Limits: Mutual Funds can only invest up to 20% in one entity (except federal government instruments), keeping them diversified and robust

• REIT Rules Are Tight: These funds must put at least 80% of assets into real, income-generating properties, limit concentration exposure to 20%, and appoint licensed property managers and appraisers

• Strict Governance & Transparency: Prospectuses must disclose investment strategy, manager credentials, fees, risks, board details, redemption terms. Basically everything a curious investor would want to know

Big Picture

A good portfolio matches your specific needs: balanced, varied, and suited to your risk-reward appetite. The ECMA directive adds structure, oversight, and confidence to mutual funds in Ethiopia’s growing market. Whether you’re building capital for a steady passive income or going up the wealth ladder, now you’ve got the tools and the rules on your side.

REITs also unlock a flood of money from savers directed to real estate developers. Check out our deep dive in December.

We’re going into exciting times of increased saving and investment choices. Get familiar and be ready to explore the different investment options.

Thanks for sticking with us, ፍራንክ family! Keep those wallets smart and your inbox open - we’ll be sliding in next week!