Kenya’s Safaricom Wants to Operate in Ethiopia; Can it Succeed?

Kenya’s leading telecommunication company, Safaricom Plc, has indicated interest to obtain an Ethiopian license. The telco informed its stakeholders of this bid in a notice that was obtained by Business Elites Africa.

In the notice, Safaricom disclosed that it plans to submit its proposal to Ethiopian regulators through a consortium which is being led by itself, Vodacom and Vodafone (its parent companies), Japan-based Sumitomo Corporation and Britain’s CDC Group.

Note that Safaricom’s bid to operate in Ethiopia is in response to earlier announcement by the Ethiopian Communications Authority (ECA), indicating that it would be awarding telecom license to two operators. The Director-General of the ECA, Balcha Reba, told reporters in February this year that “any interested and competent operator from any part of the world can take part in the bid irrespective of taking part in the expression of interest (EoI) phase that was carried out in June 2020.” 

Checks by Business Elites Africa showed that twelve telcos (including Safaricom) have already indicated interest in the opportunity. The Ethiopian Government will assess the entries and announce successful bidders latest by May.

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What you Should Know

Ethiopia has a rather nascent telecommunication industry due to the Government’s hitherto closed market approach/disposition towards investors. Following recent policy changes, the likes of Safaricom are being attracted by the immense growth opportunities that currently exist in the market. The country is one of the most populous in Africa, with official population figures at about 100 million.

Why Safaricom Will most likely Succeed

• Safaricom Plc is one of the leading telecom firms and biggest companies in Africa with a valuation of about $10.6 billion, according to Forbes. The company is also backed by its parent companies (UK’s Vodafone and SA’s Vodacom) which own a collective of 40% stake in it. This, therefore, speaks to the financial strength of the company to take up this opportunity.
• More so, analysts envisage that Safaricom can rely on funding from other deep-pocketed foreign investors like CDC Group and International Development Finance Corporation to finance the deal.
• Safaricom also possess the technical know-how to make good use of this opportunity.

EDTOR’S NOTE: Business Elites Africa will keep you updated regarding future developments on this issue.