• Kenyan operator continues to edge towards its northern neighbour for next expansive step, with Ethiopia opening its markets to two new mobile competitors.
  • Ethio Telecom holds a monopoly in Africa’s second most populous country.

Safaricom continues to eye Ethiopian expansion

Safaricom continues to eye Ethiopian expansion

Source: Global Panorama / Flickr CC BY-SA 2.0

Safaricom Chief Executive (CEO) Peter Ndegwa confirmed the operator had submitted an expression of interest in the Ethiopian mobile licence auction. Speaking to The Standard, he described Ethiopia as “one of the few remaining opportunities for telecoms” in the region, joining a host of Vodafone Group executives to talk up Ethiopian prospects (Vodafonewatch, passim).

The Kenyan operator submitted its interest “together with other partners”. Though Safaricom has not made its proposal public, unconfirmed reports have previously indicated it will bid as part of a consortium with parent Vodacom Group and two other partners.

Among several other potential rivals for the licences, France-based Orange has been public about its interest in the Ethiopian market and is expected to also express interest. It has a substantial west African presence but is yet to make major inroads in the east of the continent. Similarly, Etisalat has also reportedly registered its interest in the licences.

The Ethiopian Communications Authority (ECA), only established in August 2019, recently invited prospective bidders to declare an interest in the spectrum rights as it begins the “liberalisation and privatisation” of its national telecoms infrastructure. According to the ECA, this process will introduce competition to the market by adding two new players by the end of 2020 (although this appears subject to slippage, owing to potential coronavirus delays and other factors) and making a proportion of the incumbent Ethio Telecom shares available to private investors, while retaining a majority stake itself. The invitation for Expressions of Interest was published in May 2020 and the ECA is said to have implemented a deadline of 22 June 2020 for submissions. Ndegwa speculated that the licence auction could be pushed to 2021, but said that no confirmation had yet been given from the ECA. “We are very committed and interested” despite the potential delays, Ndegwa assured.

Currently, the government has a monopoly in the sector via Ethio Telecom. With Ethiopia being the second most populous country on the continent, it represents a significant market to break into. Ethio claims to have 44 million mobile and one million fixed-line customers, and reported ETB 36.3bn (£840m/€940m) revenue in the year to July 2019. In the same year, the operator introduced “drastic” mobile tariff discounts — of 40%–50% — to expand its subscriber base, which resulted in 15% growth. Ethio puts the country’s “tele-density” at 44.5%, so there remains room for growth.

M-PESA remains an unanswered question

Questions remain as to the reality of how Safaricom and Vodacom will be able to approach Ethiopia in terms of go-to-market and portfolio, if they are successful in the bidding process. One of the more pressing matters, Ndegwa reiterated, was a new law that forbids foreign-owned entities from operating money transfer operations in the country. “We are trying to clarify what implications that has on our ability to have both a GSM and a money transfer business should we go into Ethiopia”, Ndegwa said. A potential workaround would be to tie with a local partner (Vodafonewatch, #186).