A woman stands outside a Safaricom shop on Kimathi Street on July 4, 2019. PHOTO | SALATON NJAU | NMG By VICTOR JUMA
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Safaricom will lead a consortium with a 51 per cent stake.
Safaricom to borrow for Ethiopia high entry costs expected to breach Sh100bn mark. The telco says the size and type of debt –bank borrowings or corporate bond — will become clear at a later date.
Besides selling the new telecommunications licences, the Ethiopian government is also disposing of a minority stake in Ethio Telecom, which has a monopoly in that market.
Safaricom #ticker:SCOM will borrow billions of shillings to fund its expansion into Ethiopia if a consortium it is leading wins one of two telecommunications licences being auctioned in that market.
The company will have a controlling 51 percent stake in the consortium, meaning that it will shoulder most of the financial investment that is expected to top the $1 billion (Sh109 billion) mark.
The Nairobi Securities Exchange-listed firm sees Ethiopia, a market with more than 100 million people and relatively lower uptake of mobile and broadband services, as presenting significant growth opportunities.
“Obviously if we are successful in the bid in Ethiopia there’ll be additional debt taken on our balance sheet,” Ilanna Darcy, Safaricom’s acting chief financial officer, said on November 9 when the firm announced its results for the half year ended September.
The telco says the size and type of debt –bank borrowings or corporate bond — will become clear at a later date.
Safaricom will, however, take longer-term debt to fund the Ethiopia venture in a departure from its current practice of taking short-term bank loans, which it pays within one year.
The company recently raised its bank borrowings to a new high of Sh32.7 billion to fund capital expenditure and pay dividends, with Ms Darcy saying most of the debt will be settled by March next year.“Together with other partners we are exploring best option for market entry based on the bidding process,” Safaricom’s chief executive, Peter Ndegwa, said of the potential Ethiopia investment.“We are not able to give further details on consortium composition, funding structure, capital expenditure amongst other details until the appropriate time.”He added that the firm was interested in the Ethiopian market where the government has started the licensing process.South Africa’s Vodacom Group, which has a 35 per cent stake in Safaricom, on Monday disclosed more details […]