Ethio Telecom has released its audited financial statements for the fiscal year ending June 30, 2025, revealing a year of strong top-line expansion and significant investment in network infrastructure, offset by a sharp rise in financial costs and growing balance-sheet pressures.

The results show a telecom operator that continues to grow rapidly in scale and commercial reach, while simultaneously facing mounting liquidity and leverage challenges.

Revenue Growth Accelerates, Driven by Data, Digital Services, and Device Sales

Ethio Telecom reported Br 148.05 billion in revenue for FY2025, up from Br 91.37 billion a year earlier a 62% increase. The company benefitted from continued expansion of mobile broadband, enterprise connectivity, Telebirr adoption, and higher device sales.

Direct costs rose to Br 58.13 billion, reflecting higher network servicing costs and inventory-related expenses, while operating expenses increased to Br 28.55 billion. Despite cost inflation, the company generated a strong EBITDA of Br 74.45 billion, up from Br 41.22 billion in FY2024.

The EBITDA margin remained healthy, underscoring the underlying operational strength of the business.

Profitability Hit by High Depreciation and Surging Finance Costs

The most striking development in the 2025 results is the sharp erosion in net profitability. Ethio Telecom reported Br 5.79 billion in net profit, down from Br 19.01 billion the previous year a 70% decline, despite substantial revenue growth.

This contraction is attributable to two factors:

Heavy depreciation and amortization Depreciation charges rose to Br 11.44 billion (from Br 8.36 billion) as the company continued to expand and modernize its network assets. This reflects the capital-intensive nature of the business and is consistent with long-term investment cycles.
A dramatic increase in finance costs

Finance costs jumped from Br 3.08 billion to Br 42.60 billion, while finance income remained negligible at Br 7.6 million, resulting in net finance costs of Br 42.59 billion.

The scale of the increase suggests significant foreign-exchange losses on foreign-currency denominated obligations, alongside higher interest expenses on new borrowings and vendor financing arrangements. For a company operating in a depreciating currency environment with sizable infrastructure debt, these exposures remain a critical risk factor.

Operating Profit Holds Strong, but Bottom Line Compresses Ethio Telecom’s operating profit reached Br 63.0 billion, up from Br 32.86 billion in FY2024 a nearly 92% improvement. However, nearly two-thirds of this operating profit was absorbed by finance costs which is highly attributable to the Fx losses, underscoring the growing gap between commercial performance and net profitability.

The income tax expense also increased to Br 14.62 billion, translating the reduced pre-tax income into a compressed bottom line.

Balance Sheet Expansion Driven by Investments and Rising Obligations Ethio Telecom’s balance sheet grew significantly, with total assets rising to Br 331.2 billion, from Br 214.2 billion the previous year a 55% expansion. Non-current assets surged, particularly:

PPE: Br 184.34 billion (from Br 141.55 billion)
Intangibles: Br 17.44 billion (from Br 1.86 billion)
Right-of-use assets: Br 2.22 billion (from Br 1.25 billion) The sharp increase in intangibles indicates substantial investment in software systems, digital platforms, licenses, and possibly spectrum upgrades.

Current assets nearly doubled to Br 112 billion, buoyed by:

Cash balances rising to Br 47.8 billion
Trade receivables increasing sharply to Br 30.54 billion, from Br 9.5 billion
Inventory levels rising to Br 25.1 billion The growth in receivables may point to slower collection cycles from enterprise clients and government entities and is a key metric to monitor for liquidity management.

Liabilities Double, with Trade Payables Driving the Increase

Total liabilities rose to Br 229.48 billion, compared to Br 114.26 billion in the prior year — a 101% increase. The expansion is primarily attributable to short-term obligations: Current liabilities rose to Br 207.4 billion, driven by: • Trade and other payables: Br 164.82 billion (up from Br 63.90 billion) • Short-term borrowings: Br 10.5 billion (up from Br 4.68 billion) • Current income tax: Br 16.37 billion

The jump in payables suggests increasing reliance on vendor credit typical in telecom infrastructure expansion but it also raises concerns about working-capital strain.

Non-current liabilities also increased, though more moderately, to Br 22.06 billion, including long-term borrowings and lease liabilities.

Equity Shows Limited Growth Despite Large Asset Additions

Equity increased marginally to Br 101.73 billion, from Br 99.93 billion, reflecting subdued growth in retained earnings and the weight of finance costs and remeasurement losses. Retained earnings remained negative at Br 1.83 billion, though this marks an improvement from Br 3.36 billion the previous year.

The limited equity growth compared to the sizeable asset expansion indicates that asset increases were financed predominantly through liabilities rather than internally generated capital.

Liquidity and Leverage Indicators Show Rising Pressure

Ethio Telecom’s current ratio stands at 0.54, with current liabilities nearly double current assets. This suggests increased liquidity pressure and reliance on short-term financing.

The debt-to-equity ratio of 2.25x reflects elevated leverage levels for the sector, though telecoms typically carry heavier debt loads due to long-term infrastructure cycles. However, the pace of liability accumulation within a single fiscal year is notable.

A Company Growing in Scale but Facing Structural Financial Headwinds Ethio Telecom’s 2025 financials portray a company expanding rapidly and investing heavily in infrastructure and digital platforms, ahead of competitive liberalization and potential privatization phases. Operational performance remains strong, with robust revenue growth and healthy operating profitability. However, the financial statements also highlight important challenges:

Surging finance costs
Expanding short-term obligations
Significant increases in receivables
High dependence on vendor financing
Compressed net profitability

For investors and analysts, the key dynamic to watch will be whether Ethio Telecom can balance its capital-intensive growth strategy with tighter management of financial risk, particularly in relation to foreign-exchange exposure, debt servicing, and working-capital efficiency.

The 2025 numbers tell a story of a telecom operator with strong operating momentum, but one whose financial structure is becoming increasingly complex and increasingly sensitive to Ethiopia’s macroeconomic environment.