Top 500 Companies: Safaricom calling Ethiopia

A pedestrian walks on a sideway outside the Safaricom mobile phone customer care centre in the central business district of Nairobi, Kenya, November 10, 2021. REUTERS/Monicah Mwangi Few companies can claim success on the scale of Kenyan telecoms operator Safaricom (#56). Since it was founded, in 1997, it has grown to become East Africa’s second most valuable firm in The Africa Report’s Top 500 Companies ranking, with a domestic subscriber base that represents two thirds of Kenyan mobile users. Its market capitalisation of $12.5bn is nearly twice that of the nine next biggest Kenyan companies combined.

The jewel in Safaricom’s crown is its mobile-money service, M-Pesa. The payments that flow through it each year are worth 50% of Kenya’s gross domestic product, and it recently overtook voice calls and SMS messaging as Safaricom’s biggest earner.

Now Safaricom is expanding its operations into Ethiopia, where the 110-million-strong population is currently served by a single state-owned provider, Ethio Telecom (#109). In May 2021, a consortium led by Safaricom won the first-ever private licence to provide telecoms services in Ethiopia, beating competition from South Africa’s MTN (#4) with a bid of $850m. Its consortium partners include South Africa’s Vodacom (#12) and British development finance agency CDC Group (now called British International Investment). A huge opportunity

Safaricom has already invested $200m into Ethiopia as it prepares to launch commercial operations in April. That includes a $100m data centre built by Huawei and Nokia, the first of 11 it plans to install across Ethiopia, and a lease agreement with the state energy provider that grants access to the country’s fibre-optic cable network for five years.

In total, Safaricom is expected to plough $8bn into Ethiopia over the next decade, in the country’s largest-ever foreign direct investment. Its operations will create 1.5m of direct and indirect jobs, according to Tewedaj Eshetu, a Safaricom spokesperson.

Renaldo D’Souza, head of research at Sterling Capital in Nairobi, says Safaricom has “reached a point of market saturation” at home in Kenya, where it controls over 95% of the mobile-money market.

“Safaricom is looking beyond the Kenyan market to others that are less competitive and that offer high growth potential,” D’Souza tells The Africa Report. “That’s the appeal Ethiopia holds – it has just one service provider and it is a significantly larger country than Kenya in terms of population. Over the past 10 years – before the current conflict – Ethiopia has also been […]

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