Safaricom targets a customer base of at least 10 million across 25 cities in the next year.
- Since Safaricom Ethiopia switched on its mobile telecommunications network, it has grown coverage from an initial 11 to 22 cities.
- Safaricom Ethiopia is building a wholly-owned mobile network and also has infrastructure sharing deal with state-owned Ethio Telecom.
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Safaricom is now targeting a customer base of at least 10 million in Ethiopia in the next one year. The move is tailored to shake up the country’s telecommunication industry. Latest developments follows huge investments in the country, with cash transfer service M-PESA now on the table.
Since Safaricom Telecommunications Ethiopia switched on its mobile telecommunications network and services in Addis Ababa in October last year, major inroads have been made in the second-most populous country in Africa.
It has grown coverage from an initial 11 cities when it launched to 22. The telco with a target of more than 25 cities by the end of this quarter. Safaricom Ethiopia is rolling out 2G, 3G and 4G mobile services and has plans for 5G in coming months.
Infrastructure sharing agreement with Ethio Telecom
The company says it is building a wholly-owned mobile network and also has infrastructure sharing and interconnection agreements in place with Ethio Telecom. The telco’s vision is to transform lives through a digital future for all Ethiopians.
Safaricom Ethiopia is owned by an international consortium including Vodafone Group; Safaricom PLC; Vodacom Group; Sumitomo Corporation – one of the largest international trading and business investment companies; and British International Investment (BII) – the UK’s development finance institution and impact investor.
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Since the commercial launch last year, Safaricom Telecommunications Ethiopia has added close to three million customers. It has also set up a distributor network of over 114 outlets and 1,300 network sites. These investments are meant to deliver the fastest data network in the country.
It currently has 44,000 points of sales while its operations have employed over 900 staff, 81 per cent of whom are Ethiopians. As a result, the telco has created about 4,610 indirect jobs.
Safaricom keen to replicate M-PESA success in Ethiopia
“Since the commercial launch in October, the brand is visible, deeply rooted in the Ethiopia and quickly becoming in every sense fabric of the society. The potential for Ethiopia is immense and we look forward to the future with optimism and excitement,” CEO Peter Ndegwa said.
The company is keen to replicate its Kenyan operations in the market of 119 million people, where 63 million are of the age of 18 years and above.
Mobile penetration in Ethiopia is at 57 percent with 35 percent of the country’s population financially included. About 22 percent of its population is in urban regions with the remaining 78 percent spread in rural areas.
Safaricom Ethiopia is eyeing the market which has 10,000 large enterprises and more than 240,000 major SMEs as it cements its footing in the country.
It is banking on the Ethiopian government digital transformation agenda as part of drivers of its business in the country, riding on the success story it has back at home in Kenya.
Dubbed ‘Digital Ethiopia 2025’, the government strategy endorsed by the Council of Ministers in June 2020 is aimed at helping the country realize its digital potential and leverage technology to build a more prosperous society.
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Safaricom Ethiopia gets license to roll out M-PESA
As part of that process, Safaricom Ethiopia was granted a nationwide full-service Unified Telecommunications Service Licence and is the first company in the country to launch a competitive mobile service to Ethio Telecom, which is state-owned.
With telecommunication operations up and running, it has also received another boost on its business, which could revolutionize the country’ mobile money market and further deepen financial inclusion.
Safaricom Telecommunications Ethiopia has been granted the license to operate mobile money services in Ethiopia.
The telco’s M-PESA licence comes seven months after the commercial launch of GSM services in Ethiopia. It is expected to open the country to the world’s largest mobile payment system and Africa’s largest Fintech. Launched in 2007 in Kenya, M-PESA was world’s first mobile money transfer system.
“We are excited that this is a great milestone following our entry into Ethiopia. This positions us to provide essential financial services to the Ethiopian population. We are looking forward to launch and roll out the service over the next few months,” Mr Ndegwa added.
M-PESA empowers over 30 million customers to transact, save or borrow money through their mobile phone.
Low digital banking and payment systems in Ethiopia
The platform has catalysed financial inclusion in Kenya to 84 percent from a low of 26.7 percent in 2006. According to the 2021 FinAccess Survey, M-PESA generated over $886 million in revenue in the financial year 2023.
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According to industry data, only about 35 percent of Ethiopia population older than 15 have accounts at formal financial institutions.
The use of digital banking and payment systems in Ethiopia has been low. Industry statistics show that less than five percent of the population have mobile accounts. With the entry of Safaricom and liberalization of the country’s digital space, the market is bound to change.
In comparison, Ethiopia numbers are by far lower than the neighboring East African countries Kenya, Uganda, and Tanzania. For instance, in Kenya over 80 percent of the population aged over 15 have mobile accounts or digital payment systems. Across Uganda and Tanzania over half of the population have mobile accounts.
Financial inclusion is critical in reducing poverty, inequality and promotes business startups. With a success story in Kenya, Safaricom plans to build on this strategy across Ethiopia.
The M-PESA license came at a time the giant telco was announces its full-year2022/2023 results, which saw net income increase by three percent to $560.3 million for Safaricom Kenya.
Safaricom increased its Group Service Revenue by 5.2 percent to $2.2 billion. Further, Group net income excluding minority interest declined by 10.6 percent, attributable to Ethiopia investment within the year.
M-PESA revenue increased in FY23
Voice service revenue declined by 2.6 percent to $602.6 million as mobile data earnings grew by 11.4 percent to $401.3 million. In the year under focus, M-PESA revenue increased by 8.8 percent to $870.9 million.
Mr Ndegwa said: “We have delivered a solid set of results despite the tough operating environment occasioned by slowdown in business activity in an election year in Kenya, tough macro environment as well as change in mobile termination rates which impacted our voice revenues significantly.”
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The business, the CEO said, is stable and regained a strong positive momentum in the second half of the year.
“Looking into the future, we passionately believe that our business is well-positioned to support our customers and provide technology solutions as we transition into a purpose-led technology organization in line with our five year strategy,” he explained.
Authorities in Addis Ababa announced privatization of 45 percent stake in Ethio telecom in February.
Ethiopian Communication Authority (ECA) is also expected to issue an EOI (Expression of Interest) for the second private telecom entrant. The move is in line with the government’s strategy of liberalizing industry, opening up banking and mobile financial services.