Tele Rings The Bell 🔔

Welcome to the latest edition of ፍራንክ Digest!

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

What we’ve got in store for you:

• ⚡BUZZ: Ethio Telecom Relinquishes 10%

• 🏦 ፈረንጅ Banks Coming To The Table

• 🗝️ Key Takeaways

Thanks for reading!

BUZZ: Telecom Giant Confirms Ambition, Share Sales Start This week

You probably noticed that your Tele fees went up the past few weeks.

For example, the 11GB monthly internet package went from ETB 379 to ETB 455, that’s a 20% increase - almost የአንድ ማኪያቶ ዋጋ.

Other products such as international calling have had a dramatic 658% hike! To be fair, it sounds like that’s one service the company wants to shy away from, deterring customers who probably wouldn’t care having already acclimatized themselves to the wonders of WhatsApp voice calls.

Regardless, it seems like inflation is carving a bigger hole than we expected 👀. Along with the price swelling, a new development has caught our attention: the recent announcement of Ethio Telecom’s 10% share sale on the Ethiopian Stock Exchange (ESX) that’s raised a few eyebrows. No less regarding Ethio Tele’s privatization but more so that the exchange will be open this week!

Although the Capital Markets Authority had been teasing a start date for quite some time now, this is the clearest indication that the market will open its doors.

More on that as we see how that develops.

As for Ethio Tele, the company has reached new financial heights. With a net profit of $184M in the last fiscal year, the company has also seen its revenue go up by a staggering 21.7% compared to the previous year.

Yet, despite these impressive numbers, the price hikes and the ‘so timely’ capital raising might indicate that Ethio Tele is already shielding itself from a future cash crunch!

For such a behemoth, valuation is hard. The telecom giant is hoping to land on a concrete number when shares start selling.

In the long run, Tele hopes to sell 45% more of its shares, but that portion of the pie is reserved to foreign investors. So far, there hasn’t been any indication if this particular sale will be done via the capital markets or through closed private funding rounds.

Zooming out, it is a bit of an odd one considering that shares will be bought through an app that is owned by the listing company - The Telebirr Super App!

Traditionally, experienced brokers (FYI Tele has been issued a brokerage license to issue its stock via ECMA) are involved in this process and buyers are well informed with a prospectus* of the investment beforehand.

Prospectus* - a document that provides details about an investment offering to the public

Nevertheless, if you’re tired of paying your Ethio Telecom bills, we can’t do anything about that unfortunately😬

But you can charm your friends by telling them that you own part of the phone company that you have a love and hate relationship with!

The share sale starts tomorrow (Oct 16th), be on the lookout on your Telebirr app!

Key Takeaways:

• Ethio Telecom steps forward to kick start capital markets listing with 10% share allocation

• 45% more will be sold to foreign investors in the near future

• Interested buyers can purchase shares through the Telebirr super app

• Despite this announcement, there’s no official word from ESX on when operations will commence