Ethiopia: Is Safaricom Entering the Ethiopian Market?

6 October 2017

Telecoms

Safaricom has denied reports of the company entering into the Ethiopian market.

The Kenyan telco had been said to be gearing up for its first venture abroad, with reports that it was in negotiations with the Ethiopian government for a stake in state-owned monopoly Ethio Telecom.

"We wish to categorically state that we are not engaged in any conversations with Ethio Telecom on this matter. Any information to the contrary is completely inaccurate," CEO Bob Collymore told The EastAfrican.

Ethiopian media reported last week that the government had opened discussions with Safaricom on the sale of half of the shares of Ethio Telecom.

Other reports indicated that Safaricom was discussing a mobile money partnership with an Ethiopian bank.

Ethio Telecom offers slow, expensive, and unreliable phone and Internet services.

Kenya's Principal Secretary in-charge of ICT Victor Kyalo said he had seen a tweet about the transaction.

"It is not clear whether it is Safaricom or Vodacom. I tried to check, but nobody seems to know any information. If they have, they seem to be guarding it," Mr Kyalo told The EastAfrican. The Kenyan government owns 40 per cent of Safaricom.

Last week, Ethiopian satellite broadcaster Esat reported that both the sale of Ethio Telecom shares to Safaricom and the sale of the Addis Ababa Hilton Hotel to Ethiopian-born Saudi tycoon Sheikh Mohamnmed Hussien Alamoudi, the 159th richest man in the world according to Forbes, were part of the authorities efforts to ease the forex crunch in the country and tackle indebtedness.

Esat said that National Bank Governor Teklewold Atnafu had recommended devaluation of the birr, to invigorate foreign trade and inflows of hard currency.

Ethiopia is facing a foreign currency crisis as a result of the poor performance of its exports sector and ballooning expenditure on infrastructure projects.

Speculation about Safaricom's moves in Africa has intensified since May, when Vodafone Group consolidated its 35 per cent ownership of Safaricom to its African subsidiary Vodacom Group.

At Safaricom's annual general meeting two weeks ago, Bob Collymore said that the ownership changes at the top allowed the company to set up shop in underserved areas in the region.

"These changes have freed Safaricom to take the over-the-top services into other markets," he said at the meeting.

According to Mike McCaffrey, an independent financial technology advisor the deal benefits Vodacom by diversifying its portfolio as two of its biggest countries of operation, South Africa and DRC Congo, face serious economic and political instability.

Earlier this month, Bob Collymore was reported by the Financial Times as saying that the firm planned to expand outside Kenya, with eastern Africa and West Africa on the radar.

"In two to three years' time we will be in four to five African countries. I don't think we will step out of Africa because that's too far and you have lots of other challenges," Bob Collymore told FT.

When Ethiopian prime minister Hailemariam Desalegn visited Safaricom's headquarters in 2012, he asked for a partnership between Safaricom and Ethiopia in growing the ICT sector.

Desalegn said that Ethiopia was looking to Kenya, Brazil and Pakistan to develop its mobile telephony market and leverage off the benefits of mobile technology.

At the time, Ethiopia's Prime Minister was accompanied by Kenya's then ICT permanent secretary Bitange Ndemo, who now sits on the board of Safaricom.

Source: The East African