Companies

Safaricom gets formal nod to start operations in Ethiopia

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Safaricom CEO Peter Ndegwa. PHOTO | POOL

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Summary

  • Safaricom has been formally granted a telecoms licence to start operations in Ethiopia, setting the stage for Kenya's largest telco to introduce services in the market of 110 million people. 
  • The licence has been awarded for an initial period of 15 years effective July 9 this year, a statement by the Ethiopian Communications Authority (ECA) said. 

Safaricom-led consortium has received a telecommunication operator licence in Ethiopia after incorporating a local company, setting the stage for Kenya's largest telco to start operations in the market of over 100 million people.

The Ethiopian Communications Authority (ECA) said Thursday in a statement that the Global Partnership for Ethiopia has incorporated and registered its local company Safaricom Telecommunications Ethiopia PLC.

The consortium received a designate licence in May after winning the bid and were given 45 days to register a local company before getting the 15-year renewable operator licence.

The move signals that the consortium will fly the same brand name as the telco’s Kenya operations.

“The ECA has granted a nationwide full-service Unified Telecommunications Service License to the Safaricom Telecommunications Ethiopia PLC effective from 9 July 2021, valid for a term of fifteen years from the effective date, and renewable for additional terms of fifteen years subject to fulfillment of all license obligations,” ECA said.

Ethiopia’s award of a new telecoms licence paves the way to open the market to international investors for the first time, a key part of Prime Minister Ahmed’s economic strategy.

Safaricom owns a majority stake in the consortium. Other partners in the consortium are British development finance agency CDC Group and Japan’s Sumitomo Corporation.

The consortium won the licence with a bid of $850 million (Sh91.6 billion) and aims to start operations in Ethiopia next year.

Another partnership led by MTN Group Ltd, Vodacom’s Johannesburg rival, and the Silk Road Fund, a Chinese State investment group, was turned down after bidding $600 million (Sh64.77 billion).

The plans to expand to Ethiopia have however been complicated by a US State financier threatening to recall its loans following escalation of armed conflict in the horn of Africa nation.

The US International Development Finance Corporation (DFC) says that the acts of violence against civilians in Ethiopia’s Tigray region could affect the release of $500 million loan.