Safaricom shareholders greenlight Ethiopia expansion

Safaricom’s shareholders formally approved the operator’s incorporation in neighbouring Ethiopia, following it led a successful bid for a telecoms licence in Africa’s second largest country.

The licence, the first of its kind in Ethiopia, whose telecoms market has been monopolised by the state-owned Ethio Telecom, was awarded after the consortium led by Safaricom outbid a rival consortium led by MTN by $250 million. Safaricom Telecommunications Ethiopia Plc, the operator’s local presence to operate on the licence from next year, was set up in early July. The shareholder approval at the Annual General Meeting now gives it the full legitimacy.

“The board is committed to working with management to deliver value to our shareholders but, most importantly, to ensure we continue to be there for our customers, staff and the community, especially in this new phase,” said Michael Joseph, Chairman of the Board.

Safaricom, hugely successful in Kenya, has long harboured the ambition to expand outside of its home market. Winning the licence and setting up the business in Ethiopia, Africa’s second largest country by population (next only to Nigeria), represents the realisation of that ambition.

“Ethiopia is a critical part of our strategy under Mergers, Partnerships & Acquisitions. We are proud to lead this partnership that will provide quality and affordable mobile and internet connectivity to enable more Ethiopians to access quality telecommunications services.” said Peter Ndegwa, Safaricom CEO.

Meanwhile, the management also reassured its investors that the company would not relegate Kenya to any lower position on its agenda. “Even as we start operations in Ethiopia, we pledge to continue investing in our country ensuring to always offer our customers superior network connectivity and efficiently enhance our network, products and services,” Ndegwa said.

Safaricom may be best known globally by its mobile money solution, M-Pesa. However, the licence in Ethiopia does not open the door to the country’s mobile money market. Instead, the Telebirr service operated by Ethio Telecom will be shrouded from competition “for about a year”, according to Abiy Ahmed, the Ethiopian Prime Minister.

The exclusion from the mobile money market is believed to be a factor that had dampened the enthusiasm from other bidders for the licence, for example Orange, which operates Orange Money and Orange Bank. Instead of sitting out the year as Safaricom has decided to do, Orange is said to be looking at the option to buy into Ethio Telecom as the monopoly is going to be partially privatised.