Safaricom Ethiopia eyes Sh46bn loan from IFC

Safaricom headquarters

Safaricom PLC headquarters in Westlands, Nairobi.

Photo credit: Dennis Onsongo | Nation Media Group

What you need to know:

  • The lender had last year committed a total of Sh34bn in debt and equity investments.
  • Safaricom Ethiopia is the first private sector-led mobile operator in the country.

The International Finance Corporation (IFC) is set to lend Safaricom Ethiopia an additional Sh46 billion ($350 million) to support its expansion of telephony and mobile money services.

In its latest disclosures, the global private sector financier has revealed plans to top up the debt ($157.4 million) and equity investment ($100 million for a 7.25 per cent stake) it already injected into the telco last year.

If approved, this will bring IFC and its partners’ total financing to Safaricom Ethiopia, which is majority owned by Safaricom Plc, to Sh80 billion ($607.4 million).

“IFC’s further proposed loan of up to $350 million will support STEP (Safaricom Telecommunications Ethiopia Private Limited) with the ongoing expansion of its telecommunication network and mobile money services and enhance the competitiveness of the local telecommunications market,” the lender said.

Equity investments

IFC said it is ready to lend between $150 million and $200 million, noting that the rest of the balance will be sourced from development finance institutions and other lenders.
Equity investments

The lender had last year committed a total of Sh34 billion in debt and equity investments in the Ethiopian entity, which is owned by the Global Partnerships for Ethiopia (GPE), a consortium of international investors in which Safaricom Kenya’s stake is 51.7 per cent.

IFC said the initial investments “have had satisfactory environmental and social performance,” based on the assessment done by its team, paving the way for the extra investment.

Parent company

The multilateral lender expects that its expanded investment will further boost its ability to increase competitiveness in the mobile connectivity industry in Ethiopia, in addition to increasing access to quality phone networks.

Safaricom Ethiopia is the first private sector-led mobile operator in the country, after entering the industry in 2021 when Addis liberalised the telecommunications sector.

Since starting operations in the country in late 2022, the subsidiary is yet to break even, and has been weighing down its parent company’s profits for the last two financial years due to start-up losses that are estimated to have peaked in the year ended March.

In the period, the Ethiopian subsidiary made a net loss of Sh42.66 billion as the Kenyan arm posted profits of Sh84.7 billion.