Safaricom Seeks Shareholders’ Nod to Create Subsidiaries, Vodafamily Ethiopia

Safaricom will seek shareholders’ nod on July 30 during its Annual General Meeting on the creation of subsidiaries in a series of companies formed for entry into Ethiopia’s telecoms market.

The Ethiopian government announced that a new telecommunications license had been awarded to the Global Partnership for Ethiopia –  a consortium comprising Safaricom PLC, Vodacom Group, Vodafone Group, the United Kingdom’s development finance institution CDC Group plc, the Japanese-owned Sumitomo Corporation, and the Development Finance Corporation.

In a public notice issued Tuesday, the 15-year license does not include the right to operate mobile money with the right to apply for an additional 15 years.

In the ownership structure, Safaricom will own 55.7 per cent in the new venture. 

Sumitomo Corporation is the second-largest investor with a 27.2 per cent stake, followed by UK’s sovereign investment fund CDC Group (10.9 per cent) and South Africa’s Vodacom Group (6.2 per cent).

“As Safaricom will directly or indirectly hold more than 50 per cent equity stake in each of the consortium companies, each such consortium company will become a subsidiary company of Safaricom,” the telco said in the notice.

“The consortium, through the operating company, intends to commence commercial operations in 2022.”

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.

The Global Partnership for Ethiopia was created to bring about transformational economic and social impact in the country. The provision of accessible, affordable and high-quality mobile and internet connectivity by the Partnership will enable greater social inclusion as millions more Ethiopians access quality telecom services. 

Increased connectivity in Ethiopia will also boost the economy, impacting over 1 million jobs with digital training and skills, and bringing about productivity improvements for countless micro-entrepreneurs and small and medium-sized enterprises.