BETTER DEAL

Safaricom drops interest in Ethio Telcom after securing license

The Kenyan telco had in October 2019 expressed interest in the Ethiopian firm which is in the final stages of partial privatization.

In Summary
  • Safaricom targets to create a million jobs and support over three million SMEs in Ethiopia 
  • It will factor operational costs for the Ethiopian market in its half-year planning. 
Safaricom CEO Peter Ndegwa speaks during the release of the financial results for the year ended March 31, 2020.
Safaricom CEO Peter Ndegwa speaks during the release of the financial results for the year ended March 31, 2020.
Image: COURTESY

Safaricom Plc in no longer interested in a stake in Ethiopia’s state-owned Ethio Telecom after a consortium it leads won a license to operate in the country.

Speaking at a virtual press briefing on Tuesday, Safaricom CEO Peter Ndegwa said the desire for a stake in Ethiopia's only telco firm has been overtaken by events and they are now keen on becoming a worthy competitor in the market.

The Kenyan telco had in October 2019 expressed interest in the Ethiopian firm currently in the final stages of partial privatisation as the government opens up its telecommunication sector. 

“We are looking at all options. We either buy a stake in Ethio Telecom or seek a licence to start operations in Ethiopia,'' then Safaricom acting CEO and current chairman Michael Joseph said at the time.

On Saturday, the Safaricom led consortium that includes its parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan's Sumitomo Corporation won the licence to operate in the landlocked nation after submitting a financial bid of $850 million (Sh92 billion).

Yesterday, Safaricom said it was now awaiting for clearance before rushing to have a slice of the market currently boasting over 50 million mobile phone users. 

"We don't have the exact date when we will enter the market but we are ready,'' Ndegwa said. 

He added that the telco is keen in creating a social-economic transformation  that will deliver at least a million jobs created in the first few years of operation in Ethiopia and support three to four million small scale businesses. 

He said that although Ethio Telecom has a head start for voice and recently launched mobile money services, Safaricom and its partners have a wealth of experience in their respective spaces that up service delivery in the market. 

Early this month, Ethio Telecom launched a mobile money transfer service a move aimed at going ahead of  Safaricom's M-Pesa. 

According to the state-owned mobile phone operator, telebirr, will mark a shift for Ethiopia, where the banking system is seen as inefficient with 19 commercial banks serving a population of about 115 million.

The company aims to attract 21 million users for the service in its first year of operations, rising to 33 million in five years.

Ethiopia is working on the Homegrown Economic Reform programme which accommodates both the opportunities of the free market and the role of the state to address the country’s economic challenges—although with a tilt towards the non-state sector.

The programme envisages boosting the private sector’s contribution to the overall economy by opening up major public enterprises starting with the telecommunication sector.

Apart from Ethio Telecom, other state entities lined up for privatisation include Ethiopian Airlines, Ethiopian Electric Power Corporation, and Ethiopian Shipping & Logistics Services Enterprises.