Sunday, 05 July 2020

Ethiopian liberalisation: Safaricom officially bids for licence

by Harry Baldock, Total Telecom
Monday 15 June 20

The Kenyan operator confirmed its bid at the weekend, with some suggesting that an Ethiopian licence could open a gateway to the rest of Africa

This weekend, Safaricom CEO Peter Ndegwa confirmed rumours that the operator had put in a bid for one of the two telecoms licences being made available in Ethiopia. With a population of over 100 million people, all of which are served by just a single state-owned operator, Ethio Telecom, Ethiopia has long been a forbidden fruit for other operators in Africa &ndash…

This weekend, Safaricom CEO Peter Ndegwa confirmed rumours that the operator had put in a bid for one of the two telecoms licences being made available in Ethiopia.

With a population of over 100 million people, all of which are served by just a single state-owned operator, Ethio Telecom, Ethiopia has long been a forbidden fruit for other operators in Africa – a market with staggering potential for growth forever out of reach. However, in June 2019 it was announced that the country, one of the few remaining telecoms monopolies in the world, was being liberalised and would be inviting licence bids from foreign telcos.
 
Since then, Safaricom has been one of the frontrunners in the race to acquire one of the two operating licences being made available, each of which has been estimated to be worth around $1.5 billion. Back in February, Safaricom was reportedly looking for partners with which to form a consortium for a licence bid, but the recent confirmation by Ndegwa did not mention any partners by name. 
 
Other rivals speculated to looking to invest include MTN and Orange, as well as Zimbabwe’s richest man, Strive Masiyiwa, owner of South Africa’s Econet. 
 
The process of liberalising the Ethiopian telecoms sphere was initially planned to take place much sooner, but elections and then the coronavirus pandemic resulted in significant delays. Now, it seems unlikely that the new licence holders will be selected this year.
 
With Vodafcom, Safaricom recently acquired mobile money service M-Pesa, with plans to turn the service into “Africa’s largest unbanked bank”, according to Vodafone CEO Nick Read. However, even if they do win the Ethiopian bid, Safaricom will not be able to roll out the fintech service immediately in the east African country, as arecent government ruling now forbids foreign companies from offering mobile money services within Ethiopia.
 
This will not slow M-Pesa’s growth beyond Ethiopia, however, with Safaricom and new CEO Ndegwa looking to expand into yet more verticals. 
 
“M-Pesa has been successful, and we are looking at what can be the next M-Pesa,” said Ndegwa. “What should we do in education, health or agriculture? We have units like Digi Farm to support small farmers and M-Tiba. How can we scale those up so that in five years? They could be your next M-Pesa.”
 
 
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