Safaricom on Ethiopia Investment: “Opportunities Outweigh The Risks”

Our investment in Ethiopia as you are all aware Safaricom telecommunication Ethiopia plc is now a subsidiary of Safaricom plc.

Safaricom chief executive Peter Ndegwa on Wednesday at a virtual investor briefing

Our investment in Ethiopia as you are all aware Safaricom Telecommunication Ethiopia plc is now a subsidiary of Safaricom plc. 

We are currently in the process of setting up our operations preparing detailed plans for operational readiness amongst other requirements ahead of our commercial launch in 2022. 

We are in contact with the relevant authorities in Ethiopia updating them as per our license obligations. We are confident and looking forward to launching commercial operations as projected whilst cognizant of the current evolving situation in Ethiopia and as we proceed with our plans adapting and assessing the situation as it evolves. 

For now, our priority is the safety and security of the small number of employees that had already joined the organization.

We hope for a fast and peaceful resolution to the current situation. We remain committed to taking telecommunication and digital services to the people of Ethiopia 

The opportunities are immense as shown in the sim card penetration rates as well as projected GDP growth rates. As such, the task ahead is ambitious and speaks to the country’s focus and determination to nurture innovation and bolster the economy.

Looking at our Ethiopia investment in a bit more detail now,  the global partnership for Ethiopia was awarded a unified technology-neutral tech communication services license.

This includes appropriate spectrum and rights to deploy a world-class network and services that will support our ambition of contributing to Ethiopia’s digital transformation objectives.

 

We are forecasting a CAPEX investment of between one and a half to two billion US Dollars over the next five years to meet the licensed coverage obligations. Together with our partners, British development finance agency CDC Group and Japan’s Sumitomo Corporation,  we have availed funding to support this new venture which we anticipate breaking even by year four of our operations. Our break-even targets may be significantly impacted by the impact of the current conflict on the launch of operations which we target by mid-2022.

Sources of funding for this venture include a mix of debt and partners, equity.

The projected growth will be enabled by network development through own build and infrastructure sharing world-class digital services and availability of affordable devices in the market.

Safaricom expected to break even in the fourth year of its Ethiopia operations, said Safaricom chief executive Peter Ndegwa

Risks

Within the investment, there are risks and uncertainties. We are aware of and have mapped out possible risk areas and scenarios ranging from implementation of market regularization and the new regulatory frameworks to the ongoing political conflict, forex and availability amongst others.

However, the opportunities outweigh the risks in our view and the uncertainties largely because the telecom market liberalisation has been unquestionably positive and of value for countries across the world. From our experience in Kenya and across the region, we know that the liberalisation of Ethiopia’s telecommunication market will be of value increasing connectivity creating, new digital services and businesses and generating new jobs for citizens across the country.

So how are we prepared to launch operations in Ethiopia?

In readiness to launch operations, we have appointed Anwar Soussa as the Safaricom Ethiopia telecommunication managing director. We have also appointed the senior leadership team to lead the establishment of the business and preparation for launch.

We’ve launched a recruitment drive to hire a significant number of Ethiopians including a graduate management program where we are committing to hire 150 graduates every year which aims to recruit and train future leaders within the organization. 

Safaricom expected to break even in the fourth year of its Ethiopia operations, said Safaricom chief executive Peter Ndegwa

We are following closely the development in Ethiopia as we gear up for launch as per our licensing obligations.  The team is now preparing for the deployment of network and IT equipment to provide world-class digital services across all regions in Ethiopia. 

To reiterate,  we are committed to taking digital and telecommunication services to Ethiopia to improve the lives of millions and are continuing our preparation for commercial launch whilst working remotely.


Peter Ndegwa, CEO Safaricom – Transcript during Safaricom HY 22 presentation.