Hey crew, here’s to another week of cutting through the noise and focusing on what actually moves financial minds forward.

No buzzwords, just the stuff affecting wallets, business & the economy:

📈 TELE Shares Are The Stock Market’s Main Character

💿 From Paper to Digital: Guide For Ethiopian Shareholders

⚖️ Salary Balance: What If You Matched Your CEOs Comp?

Here’s to the 115th edition

Let’s dive in.

Ethio Telecom shares are suddenly hot.

You might remember, they did not start that way.

When the company first offered shares to the public, the response was typical of us Ethiopians: suspicious.

Ethio Telecom offered 100 million shares to the public back in October 2024, but only sold about 10.7 million. It raised 3.2 billion birr from more than 47,000 investors, which is not nothing, but it was also far from the original ambition.

Then they listed on ESX.

And suddenly, everyone remembered they could buy shares in one of the biggest public companies in Ethiopia.

Originally offered at 300 birr, share prices jumped to 380 upon listing on ESX May 26th, and are now trading around 852 birr.

That is almost three times the original price.

Very nice.

It might be time to pat ourselves on the back, by announcing we always believed in this company. Well….truth is we had our doubts.

Nevertheless, before anyone starts calling themselves the Warren Buffett of Bole, this is also a useful lesson in how young markets behave.

Ethio Telecom is not some obscure company selling industrial bolts in a warehouse behind Kaliti.

Everyone knows it.

Everyone uses it.

Everyone has complained about it at least once.

That familiarity matters.

For many first-time investors, Ethio Telecom is easy to understand.

You may not know the first thing about how your voice magically travels across the country, but…you know airtime. You know Telebirr. You know the network disappearing exactly when you need to top up on your package.

So demand is strong.

The main lesson is dividends, or lack thereof in TELE’s case.

For years, Ethiopian investors have been trained to think about shares mainly through dividends.

Especially bank shares. You buy, you wait, the annual meeting happens, someone reads a long report, and eventually you hope the dividend makes you feel respected.

Ethio Telecom is teaching a slightly different lesson.

In fact, all the dividend they declared is actually going to government.

Painful to other shareholders, yes. But the share price jump shows another part of investing: returns do not only come from dividends. They can also come from capital gains; the increase in the value of the shares you own.

That is a big mental shift.

A share is ownership in a business whose share price can move based on demand, supply, performance, expectations, and sometimes pure investor excitement. It is not just a dividend machine.

That makes TELE Ethiopia’s first mass-market stock market teacher.

It is teaching investors that buying price matters. Selling price matters even more. Therefore, timing of your buy/sell decisions matter. And dividends are not guaranteed.

Capital gains, or losses, are real.

Ethio Telecom’s share story is in a way what Ethiopia’s young capital market needed: a little excitement, a little confusion, and a lot of education.

The slow start showed that selling shares to the public is not easy. Trust takes time. Investor education is important. Digital access alone does not create demand.

Ethio Telecom may not be handing new investors dividends yet. But it has already handed them something useful: a live demonstration of capital gains.

For Ethiopian investors, that’s new and it’s a lesson they needed.

The stock market is not just about waiting for annual dividends. It is about understanding when to buy, what you own, why the price moves, and when you should sell.

Welcome to the market.

For the hundreds of thousands of Ethiopians who have historically held physical share certificates from banks, insurance or any Share Company, a pressing action is required.

Under the Ethiopian Capital Market Authority’s (ECMA) Public Offer and Trading of Securities Directive No. 1030/2024, the Ethiopian government now mandates all shares held in Share Companies to be registered digitally in a bid to improve transparency and pave the way for those companies that wish to eventually list in the Ethiopian Stock Exchange.

As a shareholder at this stage, very little is required on your end.

The company you hold shares in, is responsible to carry out its KYC (obviously Fayda, some form of I.D. and your Tax Identification Number). You most likely need to head over to the Share Company’s Investor Relations department for this process.

Then they tally up the number of shares you have and register it with ECMA in what’s called a Central Securities Depository (CSD).

This means, you no longer need to keep a file of your share certificates as it gets digitized or better known as dematerialized. Just like how we got rid of the shoebox full of cash, coins and love letters under our bed.

This might come in handy in case you want to trade your existing shares or get new ones listed on the Ethiopian Stock Exchange (ESX).

You cannot trade directly and call it a day anymore. You must utilize a licensed brokerage firm (acting as a Trading Member on ESX) which will manage the ownership transfer legally (here comes the transparency aspect).

To open a brokerage account, you need to submit an Account Application form with CBE Capital, Wegagen Capital, Ethio Fidelity or any of the 8 currently offering such services.

You then get a cash brokerage account (there is no minimum cash deposit during opening). Once approved, this cash account serves as your portal to execute your trades. Funds get deposited when you sell your shares or debited when you purchase new equities.

Once your equities are deposited into your brokerage account and registered with the CSD, you are ready to trade.

Trading in shares incurs transaction costs. The fees are distributed among your broker, ESX and ECMA.

Both CBE Capital and Wegagen Capital set their baseline equity commission at 1.6% for trades executed on ESX. However, Wegagen Capital allows the fee to be negotiated down to 1.4% depending on trade volume. Fidelity offers 1.5% and 1.3% for volume trades.

Whereas, equity trades outside ESX on the OTC market, costs you a commission of 2% at CBE and Wegagen. Fidelity again offers a slightly reduced rate than its peers of 1.9%.

In addition, regulatory fees, regardless of which broker you choose, are non-negotiable fees:

Trading equity in Share Companies is no longer a bureaucratic nightmare of finding buyers or sellers through word-of-mouth. The price also becomes more transparent and dynamic when listed on ESX.

The added liquidity and transparency means that you’ll probably experience capital gains in the short term. Moving forward, the share prices will behave according to market forces offering you opportunities to ‘buy low and sell high’.

To greater control over your savings and personal wealth! 🥂

In what seemed like a fairytale move, one evening, the security guard at Gravity Payments found out that his salary matched that of Dan Price’s.

And no, this wasn’t a CBE type mess up where everyone thought that ፋሲካ came early.

The year was 2015, Price was founder and CEO of Gravity Payments, a payments and credit card company that has its own fairytale story itself.

The bold move was Price’s own idea:

Equitable salary + Breakdown hierarchical layers = Happy organization

Price himself reduced his annual $1.1M salary down to $70,000.

The world went mad.

Was the CEO looking for attention? Does he not have an understanding of corporate America? Watch the exodus soon…

On the surface, this felt more like a move seen at socialist counterparts, which America didn’t think was part of its DNA.

Historically, people got what they deserve.

Hard work, long hours, a bit of butt-kissing and you can see yourself gazing into the sunset in your corner office.

On the flip side, Price’s logic was understandable, the company was making good money and sharing that wealth seemed the right thing to do.

The effects were immediate: employee morale went up, revenue tripled and Price was deemed the most progressive CEO especially in a sector (Tech) where compensation was everything.

But not everyone was ecstatic: the management team, those that had experience and track record, working in leadership roles saw the experiment results turn against them. 

If everyone is paid the same, where is the value of that expertise and experience driven edge? 

Valid question to be fair.

Price saw this as a way to bridge the CEO-Employee wage gap not only in his own company but everywhere else. Hoping that other CEOs would take a page from his book to address the issue.

Typically, CEOs earn 281 more than the median employee.

Do CEOs actually offer 281 times the value? 

There doesn’t seem to be a scientific explanation so far.

This wide gap is difficult to explore in the Ethiopian context just because there is no public data for analysis.

But there is a gap and one of the strategies to reduce churn and increase employee output is addressing it.

Gravity Payments actually didn’t stop there.

In 2023, it introduced a profit-sharing scheme that netted an additional $8000 to each employee.

Customers never left, retention is actually two times longer than the industry average.

Now Why Is This Story Important in the context of Ethiopia?

Can you imagine Ethiopian Airlines or Heineken or Dashen Bank reading this article and exercising their own social experiment?

Probably not, although some of our readers who work there might forward it to their superiors (You know who you are 👀)

Salary equity might be a little too far fetched but a profit-sharing program could shake things up.

Banks already have a similar program inhouse, turning employees into shareholders (Wonder if they put on their shareholder hats and grill the board - who kind of are their bosses bosses!)