Safaricom has launched commercial mobile services in Ethiopia almost a year and a half after it won a licence to become the country's first privately-owned telco.

Mary Lennighan

October 6, 2022

3 Min Read
Competition comes to Ethiopia at last

Safaricom has launched commercial mobile services in Ethiopia almost a year and a half after it won a licence to become the country’s first privately-owned telco.

Safaricom Ethiopia on Thursday revealed that it has brought 4G services to market in 11 cities, including the capital Addis Ababa, having carried out a series of customer trials. It pledged to extend its network to a further 14 cities by April, a move that will enable it to meet the 25% population coverage target specified by its licence.

“We are pleased to switch on our network and start services in Addis Ababa, and to hold our national launch ceremony,” said Anwar Soussa, CEO of Safaricom Ethiopia. “Building on the phased city-by-city customer pilots, we continue to invest in providing network and services to further cities and parts of the country in accordance with the obligations of our Unified Telecommunications Services License.”

Safaricom was the major player in a consortium that won one of two available operating licences in Ethiopia in May last year as part of a government drive to open up competition in the market.  Sumitomo Corp of Japan and UK development finance institution British International Investment (BII), then known as CDC Group, also hold sizeable stakes in the outfit, while Vodafone Group is present through its ownership of Vodacom, which has a small stake, as well as via Safaricom, of course.

The licensing process attracted a fair amount of interest from international players, in no small part because Ethiopia was – and for now still is – one of the last great untapped telecoms markets. State-owned Ethio Telecom has had the market all to itself until now. But while many examined the opportunity there, ultimately only two groups submitted binding bids for licences. The second, a consortium headed by South Africa’s MTN and backed by China’s Silk Road Fund and other unnamed private equity outfits, failed to win the second licence, its bid of US$600 million coming in some way shy of Safaricom et al’s $850 million offer.

The Ethiopian Communications Authority (ECA) reopened the tender for the second licence this time last year with a view to awarding it in early 2022, but quietly cancelled its plans around the time of the December entry deadline, issuing a vague statement intimating that a number of prospective bidders had asked for the process to be put on hold. Later, in spring this year, it also mothballed its planned part-privatisation of Ethio Telecom due to the macroeconomic climate.

All of which means that at launch, Safaricom is the only private player offering services in Ethiopia, and that its only competition for the foreseeable future will be the incumbent.

Ethio Telecom has had something of a growth spurt in recent years, spurred on by the prospect of looming competition. Late last month it shared the results of its recently-concluded three-year strategic plan, in which time its customer base and revenues both grew by 76%, net profit increased by 142% and the number of smartphones on its network rose by 125%. Its new three-year plan, effective from 1 July, lacks specifics, but the telco is making all the right noises about expanding beyond telecoms and into new digital and financial services; indeed, its Telebirr mobile money service, launched in May last year, has proved pretty successful.

In the current financial year, Ethio Telecom targets 10.3% growth in its subscriber base to reach 73.5 million, the majority – 71 million – of which will be mobile customers, and grow revenues by more than 22 percent to 75.05 billion birr (US$1.4 billion).

All of which perhaps suggests that it is unphased by the prospect of competition, or that there is plenty of headroom left in the market…or indeed both.

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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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