Safaricom has reportedly reached the 5 million customers mark in Ethiopia less than a year after it launched services there, but despite a fairly solid growth rate, it still trails the market leader by a wide margin.

Mary Lennighan

August 24, 2023

3 Min Read
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Safaricom has reportedly reached the 5 million customers mark in Ethiopia less than a year after it launched services there, but despite a fairly solid growth rate, it still trails the market leader by a wide margin.

The mobile operator’s latest milestone puts it halfway to its target of signing up 10 million customers by the end of March next year, according to Africa’s Business Daily. The paper received official confirmation of the figure from Safaricom Chief Corporate Affairs Officer Stephen Kiptinness.

That 5 million figure is not in itself hugely newsworthy. But in the broader context of the nascent Ethiopian telecoms market, it is interesting.

Safaricom launched mobile services in Ethiopia in early October last year, becoming the first private player to do so and bringing competition to the market for the first time. At the time – and in the lengthy run-up to the launch of services; Safaricom secured its licence in May 2021, but discussions around the licensing process had been taking place for years – the market was viewed as one of the last great growth opportunities in the telecoms world. And to an extent, it still is. But state-owned incumbent Ethio Telecom has been on something of a growth spurt.

Ethio Telecom had a mobile customer base of just shy of 70 million at the end of June; no complicated maths needed to realise that’s orders of magnitude more than Safaricom has signed up. It’s also an increase of around 28 million in the four years since mid-2019, when the telco reported a mobile customer base of 41.9 million.

It’s likely that the Telebirr mobile money service Ethio Telecom launched in 2021 has had an impact on customer growth and that could be good news for Safaricom.

Telebirr had attracted 34.3 million subscribers as of mid-2023 with a total transaction value of 679.2 billion birr ($12.4 billion).

But while Ethio Telecom had a monopoly on mobile financial services for some time, a restriction that may well have proved to be a detractor for international telcos interested in entering the market, Safaricom has now joined the fray. It brought M-Pesa to Ethiopia just last week, three months after acquiring the required permits.

“We are excited to go live with M-Pesa in Ethiopia and start providing Mobile Financial Services to our customers,” said Stanley Njoroge, Interim CEO of Safaricom Ethiopia. “M-Pesa is known to be a game-changer for financial inclusion and provides services to more than 51 million customers across seven countries in Africa offering a safe and secure platform for transactions.”

Njoroge may not have said it, but M-Pesa could prove to be a game-changer for Safaricom in Ethiopia too. It is signing up customers relatively quickly, having now apparently added 2 million since its Q1 numbers in March, but it needs to accelerate uptake, particularly in view of the prospect of new competition in the market before too long.

When Safaricom won its operating licence just over two years ago there were two up for grabs, but the second didn’t sell, the government rejecting MTN’s bid. The government formally reopened the licensing process a month ago and made it clear that it is still looking to attract another international telco to the market.

Amongst other things, the government is touting the opportunity for any new player to offer mobile financial services, which underscores the importance of that business to telecoms operators in Ethiopia.

 

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About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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