Ethio Telecom, Ethiopia's state-owned telecommunications giant, reported a sharp jump in profitability for its fiscal year ending June, as a surge in mobile subscribers and its mobile-money service Telebirr drove earnings higher. The company said earnings before interest and taxes (EBIT) rose 47.5% to 92.9 billion birr (approximately $1.6 billion at current exchange rates), on revenue of 215.8 billion birr.
The results underscore the rapid expansion of Ethiopia's telecom market, one of Africa's largest and most underserved, as the country pushes to modernize its economy and attract foreign investment.
Subscriber Growth and Mobile Money Fuel the Boom
Ethio Telecom's customer base grew 8.3% to 90.12 million subscribers, while users of its Telebirr mobile-money platform jumped 16.4% to 60.6 million. CEO Frehiwot Tamiru attributed the strong performance to network expansion and the growing popularity of digital financial services in a country where many people lack access to traditional banking.
Telebirr, launched in 2021, has become a key driver of revenue and customer loyalty, allowing users to send money, pay bills, and access loans via their phones. The service now accounts for a significant portion of Ethio Telecom's non-voice revenue, which is growing faster than traditional voice and SMS income.
Ethiopia's telecom market is still in its early stages of development. With a population of over 120 million, the country has one of the lowest mobile penetration rates in Africa, leaving ample room for growth. The government has been working to open the sector to competition, licensing a second operator, Safaricom Ethiopia, in 2021, and planning to sell a stake in Ethio Telecom itself.
Privatization Plans and Investor Interest
The strong financial results come as Ethiopia prepares to privatize Ethio Telecom, a key part of broader economic reforms under Prime Minister Abiy Ahmed. The government already tested the waters with an initial public offering (IPO) last year, selling a 10.7% stake to domestic investors. That IPO was oversubscribed, signaling strong local demand for shares in the company.
International investors are also watching closely. Ethio Telecom's monopoly position in fixed-line and mobile services, combined with the country's young and increasingly connected population, makes it an attractive asset. However, challenges remain, including currency volatility, regulatory uncertainty, and the need for significant capital investment to upgrade infrastructure.
The government has not yet set a timeline for the full privatization, but the profit jump could strengthen its bargaining position. A successful sale would provide much-needed foreign currency and help finance infrastructure projects, while also giving ordinary Ethiopians a chance to own a piece of their national champion.
What It Means for Investors
For everyday investors, Ethio Telecom's results highlight the potential of Africa's telecom sector, where rising smartphone adoption and mobile-money services are driving revenue growth. The company's EBIT margin—calculated as EBIT divided by revenue—improved to around 43%, up from roughly 35% a year earlier, reflecting better cost control and economies of scale.
But investing in Ethio Telecom is not straightforward. The company is not listed on major international exchanges, and its shares are only available to Ethiopian residents through the local stock exchange. Foreign investors may need to wait for a secondary listing or a broader privatization that opens the door to international buyers.
For those interested in the broader theme, telecom operators across Africa, such as MTN Group and Safaricom, offer exposure to similar trends. The success of Telebirr also underscores the growing importance of mobile money, which is transforming financial inclusion in emerging markets.
Investors should also consider the risks. Ethiopia's economy faces high inflation, foreign exchange shortages, and political tensions in some regions. The birr has depreciated sharply against the dollar in recent years, which could erode the value of profits for foreign investors. Additionally, increased competition from Safaricom Ethiopia could pressure margins over time.
Still, the profit jump is a clear sign that Ethio Telecom is benefiting from Ethiopia's digital transformation. As the company prepares for further privatization, its strong subscriber and mobile-money growth make it a company to watch for anyone tracking Africa's telecom boom.
