What Safaricom's Ethiopian expansion means for Ethio Telecom

Safaricom Ethiopia has switched on its mobile telecommunications network and services in Addis Ababa, the country’s capital city.

What Safaricom's Ethiopian expansion means for Ethio Telecom
Anwar Soussa, Managing Director of Safaricom Telecommunications Ethiopia PLC, addresses delegates during the Safaricom service launch in Addis Ababa, Ethiopia, October 6, 2022. REUTERS/Tiksa Negeri

Over a year after it was granted a nationwide full-service Unified Telecommunications Service Licence, Safaricom has switched on its network and services in Addis Ababa, Ethiopia's capital city.

With its expansion, Safaricom which is the largest telecommunications provider in Kenya, and one of the most profitable companies in the East and Central Africa region will be competing in Ethiopia's mobile market with the state-owned, Ethio Telecom which has over 54 million subscribers in the country.

Ethiopia is home to over 112 million people, making it the second-largest country in Africa by population. It is one of the last countries in the world to introduce competition in the telecom industry, a rigorous process started by the government in 2019 as part of its Economic Reform Agenda, with the support of the International Finance Corporation. The reforms aim to increase jobs, reduce poverty and grow the local economy in an inclusive and sustainable manner.

📡
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.

Safaricom has rolled out its 2G, 3G and 4G mobile services across 11 Ethiopian cities, including the capital and the country's second-largest city Dire Dawa. The company further revealed plans to expand the launch to a total of 25 cities by April 2023 to meet the 25% population coverage obligation in its licence.

According to a statement by the Company seen by Benjamindada.com:

Safaricom Ethiopia is building a wholly-owned mobile network and also has infrastructure sharing and interconnection agreements in place with Ethio Telecom. Safaricom Ethiopia's vision is to transform lives through a digital future for all Ethiopians.

With Ethio Telecom experiencing a debut competition in a market it previously monopolised, the state-owned telecom is also gearing up to maintain its relevance. Ethio launched a number of mobile financial services in recent months, including an eSIM service. In September, it announced its plan to launch a music and video streaming service.

The company is also said to have a new three-year strategy, with ambitions to grow subscriber numbers by 10.3% to 73.5 million over the next year. Meanwhile, Safaricom already offers financial services through its popular mobile money platform M-Pesa, which is expected to be rolled out in Ethiopia soon.

Kenyan President, William Ruto and Prime Minister of Ethiopia Abiy Ahmed Ali during the Safaricom Ethiopia launch

According to reports, Kenyan President, William Ruto arrived in Ethiopia Thursday morning (October 6, 2022) for his first Ethiopian official visit which included the national launch of Safaricom and other bilateral issues. During this meeting, a deal was reached by the government of Ethiopia and Safaricom to grant a license for mobile money service to Safaricom.  

🏦
In April 2022, Ethiopia's central bank said it had drafted a Bill to pave the way for foreign investors like Safaricom to offer mobile money services in the country. Existing laws only allowed locally owned non-financial institutions to offer the services.

"For two decades, Safaricom PLC has combined the power of technology and our innovative spirit to solve customer and societal challenges. Led by our Purpose to Transform Lives, we have deepened digital and financial inclusion in Kenya by connecting people to people, people to opportunities and people to information," Peter Ndegwa, CEO of Safaricom PLC, said. "With these lessons and experiences, we look forward to positively impacting the people of Ethiopia with a sustainable and quality mobile network that will be a vital launch pad for nationwide digital telecommunications services to over 118 million Ethiopians."

Notable partnerships by Safaricom in Ethiopia

Safaricom Ethiopia and the Industrial Parks Development Corporation (IPDC) have also signed a sub-lease agreement for the transfer of developed land inside the IPDC-ICT park. The company will build a Tier-III telco-cloud Data Center and related telecommunication infrastructures on the sub-leased land.

In April 2022, the Kenyan company and National ID- Ethiopia (NID) signed a Memorandum of Understanding (MoU) agreement that would enable the setup of joint pilots for registration and E- KYC integration.

The telecom company is making as many strategic partnerships as possible to establish itself in its new market to take on with the competition with Ethio Telecoms.