Safaricom receives formal authorization to start operations in Ethiopia

Safaricom receives formal authorization to start operations in Ethiopia

Safaricom receives formal authorization to start operations in Ethiopia

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Safaricom receives formal authorization to start operations in Ethiopia

Thursday, July 15, 2021

Peter Ndegwa, CEO of Safaricom. PHOTO | POOL

Safaricom receives formal authorization to start operations in Ethiopia

By BRIAN NGUGI
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  • Safaricom has been formally granted a telecommunications license to start operations in Ethiopia, setting the stage for Kenya’s largest telecommunications company to introduce services to the market of 110 million people.
  • The license was granted for an initial period of 15 years starting on July 9 this year, according to a statement from the Ethiopian Communications Authority (ECA).

The Safaricom-led consortium received a telecommunications operator license in Ethiopia after incorporating a local company, setting the stage for Kenya’s largest telecommunications company to begin operating in the market of more than 100 million people.

The Ethiopia Communications Authority (ECA) said in a statement Thursday that the Global Association for Ethiopia has incorporated and registered its local company Safaricom Telecommunications Ethiopia PLC.

The consortium received a designated license in May after winning the tender and was given 45 days to register a local company before obtaining the 15-year renewable operator license.

The move indicates that the consortium will use the same brand as the telecommunications company’s operations in Kenya.

“The ECA has granted a nationwide full-service Unified Telecommunications Service License to Safaricom Telecommunications Ethiopia PLC effective July 9, 2021, valid for a period of fifteen years from the effective date, and renewable for additional fifteen-year periods subject to compliance with all licensing obligations, ”said ECA.

Ethiopia’s granting of a new telecommunications license paves the way for opening the market to international investors for the first time, a key part of Prime Minister Ahmed’s economic strategy.

Safaricom owns a majority stake in the consortium. Other consortium partners include UK development finance agency CDC Group and Japan’s Sumitomo Corporation.

The consortium won the license with an offer of $ 850 million (Sh91.6 billion) and aims to start operations in Ethiopia next year.

Another partnership led by MTN Group Ltd, Vodacom’s rival in Johannesburg, and Silk Road Fund, a Chinese state investment group, was rejected after bidding $ 600 million (Sh64.77 billion).

However, plans to expand into Ethiopia have been complicated by the threat of a US state financier to withdraw its loans following the escalation of armed conflict in the Horn of Africa nation.

The United States’ International Development Finance Corporation (DFC) says acts of violence against civilians in Ethiopia’s Tigray region could affect the release of the $ 500 million loan.

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