Safaricom considering buying a stake in Ethio Telecom

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Safaricom is considering buying a stake in Ethiopia’s State-owned Ethio Telecom, which has announced the sale of shares through a privatization plan.

Companies, like Safaricom, see the growth potential in the Ethiopian market. The country has a population of 100 million population and Ethio Telecom’s subscriber base of 44 million makes it the biggest single-country customer base of any operator in Africa.

From a cash perspective, a deal for Ethio Telecom will not be difficult for Safaricom, Kenya’s most profitable company.

Safaricom’s cash at bank stood at Sh20 billion at the end of March, up from Sh9.3 billion in a similar period a year earlier.

Michael Joseph, Safaricom’s interim CEO, Thursday said that the Nairobi bourse-listed telecom operator is considering buying a stake in the world’s largest telecoms monopoly or setting shop in Ethiopia from scratch

“We are looking at all options,” Mr. Joseph told the Business Daily in an interview on Safaricom’s plan to either buy a stake in Ethio Telecom or seek a license to start operations.

In addition to Safaricom, Vodafone, MTN, Orange, Etisalat and Zain are are other major telcos with interest in gaining access to Ethiopia’s fast-growing mobile market.

“Buying Ethio is the best investment Safaricom can make. They can use the firm as a platform to launch mobile money, which has huge potential in Ethiopia,” said George Bodo, a financial analyst and director at Callstreet Investor Relations.

M-Pesa could transform Ethiopia’s economy, as it has done in Kenya, by allowing people to sidestep a rickety and inefficient banking system and send each other money and make payments at the touch of a button.

The ability to access digital banking services is likely to be a game-changer for Ethiopians whose banking sector, which has no way of transferring funds from one bank to another.

 

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