Safaricom’s M-Pesa will now be battling for a stake of the Ethiopian mobile money market, riding on its strong foundation in Kenya which has seen it remain the dominant player.
A deal was reached to grant Safaricom a mobile money services license in Addis Ababa on Thursday evening, hours after a network launch by Safaricom Telecommunication Ethiopia (STE).
Safaricom is the major shareholder in the Ethiopian consortium, which includes UK’s Vodafone, South Africa’s Vodacom, Sumitomo Corporation and British International Investment.
STE is the first private company to be awarded a telco licence to operate in the country.
Ethiopia had initially preserved mobile money services to local firms, before changing tune In April, allowing foreign investors to launch mobile money in the country.
“A deal has been reached between the government of Ethiopia and Safaricom to grant a license of mobile money service to Safaricom,” Ethiopia’s Finance Minister Ahmed Shide announced.
This now sets the stage for Mpesa to rollout its services, which will compete with state-owned Ethio Telecom service, which has the “Telebirr”.
Telebirr was launched in May last year and currently has more than 21 million subscribers.
There is however room for Mpesa to build a customer base on the 115 million Ethiopian population.
STE which switched on its network on Thursday had already signed about 200,000 subscribers in three regions of Dire Dawa City, Eastern Harari and Oromia Region.
Safaricom Ethiopia’s 2G, 3G and 4G network will be available in 11 cities.
"Today's launch reiterates our commitment to contribute to Ethiopia’s digital transformation and inclusion agenda," Safaricom Kenya CEO Peter Ndegwa said during the official launch of STE.
Safaricom currently connects more than 51 million customers to financial services through its M-Pesa platform across seven countries in Africa.
Back in Kenya, it continues to be the most used as mobile money subscriptions maintained an upward trend, with numbers at 37.2 million as at June 30 this year–Communication Authority of Kenya data shows.
This represents a penetration level of 75.3 per cent.
The total value of deposits in the second quarter of the year stood at Sh5.1 trillion.
During the period, , Safaricom PLC also recorded the highest market shares in domestic mobile voice and SMS at 90.3 and 66.3 per cent , respectively.
Jamii Telecommunications Ltd recorded the least market shares at 0.0 per cent.
The Safaricom-led consortium obtained a licence to operate in Ethiopia in April.
It paid $850 million (Sh102.8 billion) to gain entry into the Ethiopian market, with the telco relying heavily on short-term loans to fulfil its part of the capital obligations.
President William Ruto and Ethiopia's Prime Minister Abiy Ahmed witnessed the launch.
