Safaricom Ethiopia, a subsidiary of Kenya’s largest telecommunications company, Safaricom, represents a significant milestone in the regional expansion of telecommunications services.
This venture marks Safaricom’s first entry into the Ethiopian market, which is known for its substantial growth potential due to its large population and relatively underdeveloped telecom infrastructure.
Entry into the market
In May 2021, Safaricom, as part of a consortium including Vodafone and Vodacom, won a bid to operate in Ethiopia, marking the beginning of a new era in Ethiopian telecommunications.
The entry was facilitated by the Ethiopian government’s decision to liberalize the telecom sector, ending Ethio Telecom’s monopoly.
Investment and infrastructure
Initial investment: The consortium committed to investing over $8 billion over the next decade to develop infrastructure and services.
This includes the establishment of a state-of-the-art network and the rollout of 4G and 5G technologies across the country.
Infrastructure development: Safaricom Ethiopia is rapidly deploying a network of cell towers and fiber-optic cables to ensure extensive coverage.
The aim is to provide reliable and high-speed internet and mobile services to urban and rural areas alike.
Services and innovations
Mobile services: Safaricom Ethiopia offers a range of mobile services, including voice calls, SMS, and data plans tailored to different user needs.
Competitive pricing and high-quality service are key selling points.
Mobile money: One of the flagship services expected is M-Pesa, Safaricom’s highly successful mobile money platform.
M-Pesa revolutionized financial inclusion in Kenya and has the potential to do the same in Ethiopia by providing banking services to the unbankedThe term unbanked refers to individuals who don't have access to traditional banking services at formal financial institutions like checking accounts,... population.
Digital services: The company is also focusing on introducing various digital services, such as mobile health, education platforms, and e-commerce, leveraging its robust network infrastructure.
Key updates
Market expansion and services
- Customer base and revenue: As of December 2023, Safaricom Ethiopia reached 3.1 million M-Pesa users, up from 1.2 million in September 2023. The transaction value rose from Sh3 billion to Sh18.5 billion within the same period.
- Revenue streams: The half-year results for 2024 highlighted strong revenue from various services:
- Mobile data: KShs 1,364.4 million
- Voice services: KShs 424 million
- M-Pesa: KShs 7.2 million
Infrastructure and local manufacturing
a) Local manufacturing initiatives
Safaricom Ethiopia has started producing its telecom infrastructure locally. The company ordered 68 telecom towers from Woda Metal PLC, an Ethiopian company.
This move aims to cut costs and speed up network deployment.
b) Network expansion
The company now has 2,242 base stations, covering 33 cities. This represents about 33% of the population coverage. Safaricom plans to invest between Sh40 billion and Sh45 billion this financial year to improve connectivity and service quality.
Strategic partnerships and innovations
a) M-Pesa expansion
- Interoperability: M-Pesa now works with nine major Ethiopian banks, making transactions between M-Pesa and bank accounts easier.
- Merchant growth: The number of active M-Pesa merchants increased from 12,400 to 43,100 between September and December 2023.
b) Technological advancements
Safaricom Ethiopia is advancing its 5G technology. By September 2023, the number of users with 5G-enabled devices grew significantly, showing a high demand for fast internet services.
Conclusion
Safaricom Ethiopia is quickly becoming a major player in the Ethiopian telecommunications market.
With significant investments in infrastructure, strategic partnerships, and a focus on innovation, the company is set to greatly impact Ethiopia’s digital and economic landscape.
As Safaricom continues to expand and improve its services, it will play a crucial role in the country’s digital transformation.