Kenya’s topmost telecommunication company, Safaricom, is considering buying a stake in Ethiopia’s telecoms monopoly under a privatization plan. The company joins many other mobile operators like Orange, MTN, Etisalat, Zain and Vodafone with interest in Ethio Telecom.
The announcement, which was made last week by Michael Joseph, Safaricom’s interim CEO, comes over a year after the Ethiopian government revealed plans to open the country’s telecoms market to foreign investment.
Speaking on Safaricom’s plan towards buying a stake in Ethio Telecom or seeking a license to start operations, Joseph admitted that they are indecisive and are “looking at all options” carefully.
However, acquiring a stake by Safaricom would be a much easier solution for the company than starting afresh and setting up its own telecommunication company. The rigorous process of buying land, constructing buildings, recruiting staff and growing its brand in the Ethiopian market is time-consuming and hectic. Not to mention competing for users with the dominant Ethio Telecom.
With a subscriber base of 44 million, Ethio Telecom makes Ethiopia the largest single-country customer base in Africa. This figure, coupled with Ethiopia’s fast-growing mobile market, is an attraction for global investors.
Safaricom transformed Kenya’s economy with M-Pesa mobile money service which allows people to sidestep an inefficient banking system to transfer money and make payments with the touch of a button.
Safaricom had said it was in advanced discussion with the Ethiopian government concerning the introduction of the mobile money service in the country.
But George Bodo, a financial analyst and director at Callstreet Investor Relations said that “Buying Ethio is the best investment Safaricom can make” because they can use the firm as a platform to launch its mobile money scheme. This will be a game-changer for Ethiopia’s financial system which currently lacks a robust system for electronic transfer of funds.
In addition to selling shares in Ethio Telecom, Addis Ababa plans to issue at least two new telecoms licenses to other operators as part of a “synchronized process.” Both the share sale and the licensing process are expected to be announced in March next year.
Businesses, international and regional, are poised to benefit from these opportunities in Ethiopia, the second-largest market in Africa, with a good environment for businesses to thrive.