Window opens for Safaricom in its quest to enter Ethiopia
- The privatisation of Ethio Telecom is part of country's home-grown economic reform agenda launched in 2019 to introduce competition into the sector.
- Ethio Telecom is one of the country's top profitable State-run companies including the giant flag carrier, Ethiopian Airlines.
A window that could see Safaricom finally enter Ethiopia has opened after the country finally put up for sale a stake in the State-owned telecoms company.
Ethiopia has made an official invitation to foreign telecoms operators to buy into Ethio Telecom, the country's monopoly provider.
Cash-rich Safaricom has been waiting on Ethiopia to kick-start the privatisation process as well as the sale of two new telecoms licences to gain a foothold in Africa's fastest growing economy and the continent's second most populous nation with more than 100 million people.
In a statement issued last week, Ethiopian Telecommunication Authority (ECA), the sector regulator, announced that the country would now sell a 40 percent stake in the Stated-owned company.Safaricom and its parent company Vodacom have jointly expressed interest in buying a stake in Ethio Telecom.
EXPANSIONWhen he took over Safaricom recently, the new Safaricom chief executive Peter Ndegwa renewed hopes for the telco's expansion into the region.
Mr Ndegwa said in an interview with the Nation that he would pursue opportunities in data, M-Pesa and geographical expansion to Ethiopia as part of his strategy to take the telco to the next level of growth.ECA, which is also tasked with managing the licence issuance, called on foreign companies to show interest in the acquisition of two nation-wide full service telecommunications licences.
"The launch of the Expression of Interest (EOI) represents a significant milestone and a major development in the liberalisation of Ethiopia's telecommunications market," the statement said in part.
The issuance of the two new licences would end the State's nearly century-long monopoly in the telecoms sector, allowing market opportunity to foreign companies in the country.
The privatisation of Ethio Telecom is part of country's home-grown economic reform agenda launched in 2019 to introduce competition into the sector.
"The primary goals of the government are to increase access to reliable and efficient communications services for all Ethiopians, leading to improvements in quality of life and in connectivity to support rapid economic transformation, and to maximise the opportunity presented by the digital economy," ECA said.
ECA said “we remain committed to opening up the telecom sector and unlocking the transformational power of the digital economy." According to ECA, two nationwide telecommunications service licences will be awarded to two companies through a competitive bidding.
JUNE 22 DEADLINE
Interested companies are required to submit their expression of interest by June 22.
Ethio Telecom is one of the country's top profitable State-run companies including the giant flag carrier, Ethiopian Airlines.
Last year, Ethio Telecom generated 36.3 billion Ethiopian birr equivalent to $1.1 billion (Sh116billion) at current exchange rates.
It reported 24.5 billion birr in gross profit. Ethio Telecom has more than 43.6 million clients across the country.
Safaricom's net profits surged by 19.5 per cent to Sh74.7 billion for the year ended March 2020, extending its lead as East Africa's most profitable company.
Safaricom said the profits were mainly driven by M-Pesa revenue, which grew by 12.6 per cent to Sh84.4 billion.