Safaricom gets Ethiopia's nod to start operations

Peter Ndegwa

Safaricom PLC Chief Executive Officer Peter Ndegwa 

Photo credit: Jeff Angote | Nation Media Group

Safaricom has officially gotten a telecoms licence from Ethiopian authorities, paving the way for its consortium to begin operations in the Horn country. 

The Safaricom-led consortium that won a bid to roll out telecommunications services in Ethiopia in May has been granted a 15-year operating licence by the Ethiopian Communications Authority (ECA) after registering a local company that will execute the contract. 

The Global Partnership for Ethiopia (GPE) consortium, which is 56 per cent owned by Safaricom, has registered Safaricom Telecommunications Ethiopia PLC for a period of 15 years, with an option of renewal for a further 15 years. 

GPE's other shareholders include Vodacom (6.2 per cent), Japanese conglomerate Sumitomo (25 per cent) and the UK sovereign investment fund, CDC (10 per cent).

ECA on Thursday announced it has granted the consortium a nationwide full-service unified telecommunications service licence.

“ECA has issued a telecommunications operator license for a new telecommunications service licensee. Accordingly, the Designated Licensee and parent company, Global Partnership for Ethiopia, has incorporated and registered its local company Safaricom Telecommunications Ethiopia PLC, and the local company has executed the final License Agreement in due time,” the agency said. 

“Hence, the ECA has granted a nationwide full-service Unified Telecommunications Service License to the Safaricom Telecommunications Ethiopia PLC effective from July 9, 2021, valid for a term of fifteen (15) years from the effective date, and renewable for additional terms of fifteen (15) years subject to fulfilment of all license obligations.” 

No M-Pesa

With the licence nod, the Safaricom-led consortium can now provide any telecommunications service including voice, text, data, and video using any technology whether fixed or wireless anywhere within Ethiopia. However, Safaricom will not roll out its mobile money service M-Pesa.

The consortium paid $850 million (Sh91.8 billion) for the licence, beating MTNs offer of $600 million (Sh64.8 billion), which was deemed too low by the Ethiopian Communications Authority.  

The consortium plans to invest up to $8.5 billion (Sh918 billion) in infrastructure among other areas over the next decade. The investment expected to create between 1 million and 1.5 million jobs. 

The new company becomes only the second telecoms operator in the populous country, and the first private entity to be licensed by Ethiopia in the first major step to liberalise its communications sector.

Ethiopia, which has a population of 117 million people, has a mobile phone penetration rate of just 46 per cent compared to, for instance, Kenya’s 130 per cent, according to the latest quarterly statistics by the Communications Authority of Kenya (CA). 

The country is one of the last in the world to open up its telecoms sector to competition, with its market controlled by State-owned monopoly Ethio Telecom, whose 50.7 million subscribers makes it the biggest customer base of any operator in a single country in Africa.

Ethiopia aims to attract 21 million new mobile phone subscribers in the first year of opening up the telecoms space to competition, and projects this to rise to 33 million in five years.