Eritrea is selling a stake in its state-owned telecom operator (EriTel) as part of plans to boost private investment in the Red Sea state, but the company’s chief executive said the offer was only open to domestic buyers.
Africa’s rapidly growing telecoms industry has become a symbol for the continent’s growth, with subscribers across the continent topping more than 500 million last year versus 246 million in 2008.
However, the Asmara government, widely considered one of the most tightly-controlled and secretive in Africa, is one of a handful to have until now maintained a state monopoly on their telecom sectors. Neighboring Ethiopia is another.
“This … (will) give it the friendly competitive advantage to remain as a leading player in the context of the growing Eritrean economy even after liberalization of the telecommunications sector,” chief executive Tesfaselassie Berhane wrote in an open letter to would-be investors posted on the EriTel company website.
The letter said up to 4.5 million ordinary shares would be available at a subscription price of $50 per share. The offer was closed to foreign investors.
Subscribers for fixed and cell phones had jumped nearly ten-fold to 358,000 in the past 8 years, he said. Eritrea has a population of about 6 million, suggesting significant growth potential.
The sell-off is part of an investment drive that will privatize dozens of state firms in the country, including a brewery and a number of hotels and food factories, according to state-linked reports.
Eritrea is seen on the threshold of a mining boom, which analysts say could drive growth in an agriculture-based economy that often suffers from low rainfall.
STATEMENT BY THE CEO OF EriTel
On behalf of the Government of Eritrea, it is my pleasure to make this offer of Shares in EriTel, with a mandate to give services of fixed network (landline and wireless) as well as a carrier of Global Systems for Mobile Communication (GSM) and Internet Services Provider.
Since its inception in October 2003, EriTel has grown in leaps and bounds in an effort to meet the high telephone demand that had been backlog of demand over the years, with the size of customers having scaled up from the initial total subscribes of 38,000 customer base to 358,186 for both fixed and mobiles services during the last 8 year period.
In line with the Corporation’s vision: “Aspiring Excellence in Communication” all the fixed network obsolete exchanges were replaced by digital equipment, their capacities expanded and all regions in the country have now access to wireless technology (Mobile and CDMA).
EriTel has to a greater extent bridged the communication divide between the urban and rural area which was prevalent in our country. Now, EriTel is taking this further by giving you, fellow country men and women an opportunity to own shares in this profitable business. This will not only position the Corporation to meet its solid objectives over the medium to long term but will also give it the friendly competitive advantage to remain as a leading player in the context of the growing Eritrean economy even after liberalization of the telecommunications sector.
Lastly, may I take this opportunity to thank the staff and management of EriTel for their dedication during the years and I look forward for the confirmation of your entitlement as a genuine beneficiary shareholder.
Mr. Tesfaselassie Berhane
General Manager/CEO EriTel
INSTRUCTION FOR APPLICANTS