EriTel Begins Sale of Shares

Eritrean Telecommunication Services Corporation (EriTel)
Eritrean Telecommunication Services Corporation (EriTel)

Statement and message from Mr. Tesfaselassie Berhane, General Manager and CEO Eritrea Telecommunication Corporation Share Company (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. Thank you.


Mr. Tesfaselassie Berhane

General Manager/CEO EriTel

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By Editorial Team
  • Aster Tewelde

    HGDEF are not investable, I don’t trust them with my money since their policies are susceptible to an abrupt change. I bought a house in 1999 and I regret it since I receive too much problems.

    • Your not going to invest, so why are moaning ? What you say happened to you in the past has nothing to do with selling of shares at all, and besides if your not going to invest why are you being negative. Those who invest their money in any business is risk for different reasons.

      So in conclusion nobody is forcing you to invest so why complain, if those people in the investment conference had questions and iam sure they did since its their money complained about certain issues or business laws then fine but what your doing is ranting with no cause, in other words your just stupid and please avoid any sob stories nobody cares !

      • eyob

        Wow! I guess unless its what you wanna hear, its not good enough ha. I will try to say this without calling you names, because you seem like a nice person who lacks business sense…you see in any investment, ANY, you better do your research and due diligence before you decide to put your money up and what this person went through is an experience with the same party that is asking us to invest. My money doesn’t come easy maybe yours does and I can not afford to lose it so if I was to invest you better believe I will listen to anyone who has ANY experience doing business with my gov. You can talk about your experience (if you had one), if not I suggest to go watch your (deleted) as this is above your pay grade. Biruk M’ealti.

  • abraham

    no man this is different you have to give them time – 1999 was followed by war if you remember

  • yenas

    Eritrea have no law HIGDEF doing as they wante .For any question their answer is war war war who knows 2014????

    • mebrahtu

      The first step is privatizing businesses giving to the people, the second step is privatizing government giving it to the people, step by step. Love Eritrea.

  • Yg

    Lets be obtimists. And you are lucky to own a house. We did alot but no house and nothing. Lets help our country.

  • alem

    Let us ignore everything else and look at the numbers. Now,there are a lot of question you should ask before you invest your money in anything, much less in an opaque government run telecom. What you are being asked is to pay $628.50/customer in a nation with a per capital income of $700/person. This is outrageous amount when you consider for example Verizon Wireless value per customer is $1,215 in a nation with per capital income of $48,300. If we just considers only numbers (which is a treble idea), you should not pay more than $17/customer, that is very, very generous valuation. my recombination is to RUN don’t look back.

    Verizon has 101.1 Million customers and it is valued $122.86 billion.

  • Two things about the valuation:

    The 4.5 million shares probably don’t represent 100% of the company, the government is probably only selling part of it, i.e. the valuation per customer is even higher than $628.50

    However, that’s the calculation for the 358,000 EXISTING customers – the value of the company lies in the future growth potential. Market penetration in Eritrea is only about 6% today and could grow ten-fold or more in the next few years.

    • alem

      I completely agree with you the first point, it could be much, much higher than that. the point is to point out the absurd nature of the valuation given by the government. and there are a lot more question one should ask to have a clear value of EriTel. especially how much they make from each customer could give a better assessment of to the company.

      your second point seems to miss your first point completely. we know companies do grow but they do not grow to charge there customers annual income. if Verizon was valued the same way as EriTel it would be valued over 4.4 TRILLION DOLLAR(minimum value). another way of looking will be to value Verizon $43,365/customer. which is absurd to the n degree.

      another point, 6% penetration rate is completely misleading. only about 55% of the population is between the age of 15-64 years. many of these people people live below the poverty line. how do you expect these people to afford cell phone? if they do, the price will be so low you will not be able to get your investment back much less with profit.

      the fact is half of the population will be to young or to old to afford cell phone. many people in the other half will be to poor to afford a cell phone. so in my estimation you are looking at a potential customer of 1 million to 1.5 million people and many of these people can only afford chip cell phone.

      • Tsegai

        Alem you seem to have a problem. Whats that makes you so angry? We have listened to your concerns, so let others have their say too and maybe you should devote more time to your daily job if you have one.

  • The difference between a company like Verizon and EriTel is that Verizon is operating in a virtually saturated market, their customer base is not going to grow significantly anymore, they have a more or less steady income from each of those customers. For a company in an emerging market on the other hand, such as EriTel, the future growth potential forms a significant part of the valuation, it is not based on today’s customer base alone – next year this subscriber base may already be double. Think of the other end of the scale – a newly licensed (second) network operator in an emerging market, not a single customer yet, still facing massive investments to build the network… such a company can also have a significant value already because the number of licences is limited, frequency spectrum is limited, a licence fee of millions of dollars may be involved, and there is that potential to make money by being licensed to operate in that market.

    Actually making the money is of course the next step – the average revenue per user (ARPU) in an emerging market will fall as market penetration rises, and it can be tough to make a profit on only a few dollars ARPU per month, but it is being done successfully. And you are right that market penetration figures have to be interpreted – they are given per population, but the age structure, multiple SIM cards per user, inactive SIM cards etc have to be taken into account. On this basis, African countries with similar demographics, average income etc currently have penetration rates of around 50%, and still growing, so there is a lot of potential in a market with 6%.

    • alem

      let me be clear here, there is a great deal of value in the mobile phone business in emerging markets. but it has to be valued within a reason.
      you can not value a company based on 6% penetration to intimidatingly find out half of the population you based the 6% can not be your customer at at all.
      you can not value a company be worth bout 17% nominal GDP of a country and with straight face and say it will grow even more. . even Kenya with more than a decade of mobile phone market is less 9% of nominal GDP .
      (the 17% is based on a the conservative assumption of 51% government stake, 4.5 million share being 49% of the company. if one is seriously considering investing you will need to know how much 4.5 million share represent )

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  • Stay Out

    I agree with Alem. The valuation of the company does not make sense. GOE needs to provide more detail info than they have in order for people to invest in the company. Also, we need to know our right as investors with any dispute.
    Personally, I would not invest in this company because of the many mistrust I have against GOE.

  • A country’s GDP is not a suitable benchmark for a company valuation, especially in countries where a lot of the economy takes place in the ‘informal’ sector and GDP statistics are questionable. There are examples of African telcos being valued at more than 20% of GDP. But don’t get me wrong, I am not suggesting $50 per EriTel share is a good deal – before you invest, you want to find out what share of the company that is actually buying you, and what rights you will have as a shareholder. If that information is not forthcoming or you don’t trust the seller, don’t invest. You also want to know the company’s financial position and its earnings from its current subscriber base. Those could be quite strong in the current low-penetration monopoly market, but this will shift when the market is opened up.

  • Abraham

    Whats a Stateman for when he cannot serve his people by laying out a roadmap to be followed each step of the way. What is democracy for when the Statesman of the most powerful nation in the world is judged by his looks, no matter how big of a patriot his is, no matter if he feels and thinks like his people, no matter if what he says is the truth. What is a Statesman for when his own people deny him support to achieve the betterment of a nation? Therefore, should not those who claim that a strong Statesman is a misfortune for his people and nation listen to their inner voice and uncover the truth they have been ignoring for so long. Eritrea is blessed with a strong Statesman in a region where enemies never sleep and only united people can choose their own destiny. During one of my trips to Eritrea I was complaining about the heat telling my friend that it was hot like hell. All of a sudden a former fighter sitting next to me in the bus responded, “You have never seen hell” I will never forget these words as it tells a lot about our perception in the West and how things are really down there in Africa. In the same way we should think twice and understand the complexity of our region and history of our country, before judging wrong our own flesh and blood.