Given the ongoing conflict there, it’s probably not quite business as usual for Safaricom in Ethiopia, but the leading Kenyan operator has nevertheless announced plans to invest an initial $600 million in Ethiopia where it is part of a consortium setting up a new telecommunications operation of which it is the majority shareholder.
According to the Nation news service, the amount represents Safaricom’s contribution to the start-up costs and operating licence for which the consortium has agreed to pay $850 million. Infrastructure and other costs will also be involved; for these Safaricom plans to use its own funds and loans from local banks and development finance institutions.
Safaricom’s chief executive Peter Ndegwa has suggested an outlay of between $1.5 billion and $2 billion over the next five years will be necessary to meet the licence coverage obligations, with break-even in year four.
However, he added that this target may be adversely affected by the impact of the current conflict on the launch of operations, which he has suggested will be in mid-2022.
If Ethiopian announcements are to be believed, however, the expectations are that the second telecoms provider will start operations in the first quarter of next year.
The government is reportedly finalising legal changes to allow the central bank to issue Safaricom with a licence for mobile financial services, something that had not been included in the initial licence.
The ongoing sale of a 40 percent stake in state-owned Ethio Telecom and the award of another mobile operator licence are also supposedly on the way. However, an intensifying government conflict against Tigrayan forces and their allies could undermine progress. In fact Safaricom has already evacuated some staff as a precaution.
