Safaricom eyes Sh19bn debt in Ethiopia money

Safaricom PLC Chief Finance Officer, Dilip Pal.

Photo credit: File | Nation Media Group

Safaricom PLC will be looking to raise upto $150 million (Sh19.6 billion) over several years in local currency debt in Ethiopia once the country’s securities exchange goes live in the third quarter of 2024.

This means that at the present exchange rate, Safaricom PLC plans to raise as much as 8.6 billion Ethiopian Birr through the issuance of local currency-denominated bonds any time starting September.

Safaricom’s CFO Dilip Pal says whereas going public via listing may not be viable for Safaricom’s Ethiopia subsidiary at this point, the company is keenly looking at opportunities that will emerge in the debt market for capital raising.

“We are watching that space very closely and it’s something about which we will be keen at an appropriate time as far as listing is concerned. The bond market is new and something we would be very much interested in," Mr Pal told the Business Daily following the release of the FY2024 earnings.

"Our needs could be anything in the range of $100 to $150 million equivalent. We have not finalised the number but depending on the future needs we have an opportunity within that range over a period of time and not necessarily at one go.”

Safaricom PLC has in the recent past accelerated efforts to cut back on its exposure to foreign currency-denominated debt following wild depreciation by frontier market currencies such as the Kenya shilling and the Birr that adversely impact companies’ performance by inflating finance costs.

In the six months ended September 2023, Safaricom PLC retired its $120 million (Sh15.6 billion) foreign currency loan just a year after it had taken it through a syndicated arrangement.

The loan was taken to finance capital expenditure in Ethiopia and was retired four years ahead of schedule as foreign currency exchange pressures became amplified in markets such as Kenya and Ethiopia.

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