Abstract:
Partial privatization is partial sale of shares refers to cases where the government decides to sell
part of its shareholding or a certain percentage of the total outstanding shares, to the public at
the large. The remaining shares may be retained in view of controlling or influencing decisions.
Since privatized firms with partial ownership must respect the interests of private shareholders,
they cannot be pure welfare- maximizes. At the same time they must respect the interests of the
government, so they cannot be purely profit- maximizes. Ethiopia, for the past 25 years,
witnessed zigzag economic policies ranging from a big bang privatization approach in which the
Government had intensified its effort to privatize State- owned enterprises to a developmental
State approach by retaining the big enterprises and allowing the flourishment of new ones was
the priority. However; the government has decided to retain majority share especially in
Telecommunication and also limited the number of telephone operators only to two. Yet, the
Ethiopian program of partial privatization runs to be the challenge of operational
competitiveness in the form of market dominance, because there may not be competitive
companies. The ultimate purpose of this research therefore; is to analyse if the objective of
optimal operational efficiency would attain where the government is the decision maker in
partially privatized sector of the telecom service and also limited the number of operators in the
fully privatized telecom service. The study employed socio-legal research method to analyze the
qualitative theoretical data. Some countries like Chinese experience regarding the issues of
formation and corporate governance of MOCs comparatively discussed. The research concludes
that operational efficiency would be difficult to attain unless the government becomes minority
shareholder or gradually change itself into minority shareholder and also allow operators on
fully privatized telecom service to be operated solely on the basis of competition and also
putting in place effective competition law. Unlike China, the Shareholding Structure of MOCs in
Ethiopia doesn’t get proper attention as needed. First of all, the Government neither has the
intent to retain a majority of shares in the MOCs to influence the decision making nor does it
commits to diversify the shareholding structure. So, the shareholding structure of MOCs shall be
diversified. The privatization process should be run by a well-equipped single
Governmental institution rather than entrusting the process to different Governmental bodies as
well as an advisory council in a dispersed manner
