Thursday was the official launch of Kenya’s Safaricom’s Ethiopian network. Safaricom is the first private operator in one of Africa’s biggest telecoms markets, and the Ethiopian government was happy to see M-Pesa come to the country.
The launch of Safaricom Ethiopia comes after a pilot program in ten cities and a phased launch across the country, which began in August 2022 in the town of Dire Dawa, which is 350 km east of the capital, Addis Ababa.
Until now, Ethio Telecom, which the government owns, had a monopoly with 54 million customers in Ethiopia, which has about 118 million people and is the second most populous country in Africa.
So far, Safaricom Ethiopia is the only company that can compete with Ethio Telecom, which the government owns. Between now and April 2023, Safaricom Ethiopia plans to add services in 14 more cities, bringing the total number of cities it serves to 25. This will allow it to meet its license’s 25% population coverage requirement.
This is Safaricom’s first expansion outside of Kenya, where it has almost a monopoly in the telecoms and mobile money industries. Now, it will have to go up against Ethio Telecom, which also has a monopoly. So far, there isn’t a big difference between how much Safaricom and Ethio Telecom charge for voice, data, and SMS bundles. This suggests that Safaricom may have been smart to avoid a price war.
Safaricom will probably base its service on being the best, which means it will have to build out its network coverage quickly and in a big way. Poor service complaints, especially about slow internet, have been a problem for Ethio Telecom.
Ethio Telecom, for its part, is showing off its strength as it prepares to face competition for the first time. It made plans for a music and video streaming service last month. It also said it wants to add 10.3% more subscribers over the next year, bringing the total to 73.5 million.
And in August, Ethio Telecom launched three new mobile financial services in collaboration with the Dashen bank in Addis Ababa.
At the party to celebrate Safaricom’s launch, Ethiopia’s Minister of Finance said that M-Pesa, Safaricom’s very successful mobile money products , would be allowed to be used in Ethiopia.
In a speech, President Ruto said he was sure Ethiopia would approve Safaricom’s request for a mobile money license. This was part of a deal that President Ruto and Ethiopia’s Prime Minister Abiy Ahmed reportedly made in Addis Ababa.
In April, Ethiopia’s Central bank said it had written a Bill to make it easier for foreign investors like Safaricom to offer mobile money services. The services could only be provided by non-financial businesses owned by people in the area. Many small businesses and Ethio Telecom’s Telebir run most of the mobile payments in Ethiopia.
It’s important to remember that plans for a mobile finance license have been going on for some time. Until now, these talks had been slowed down by bureaucracy, making it hard to get licenses for mobile financial services. This was done to give Ethio Telecom and its new Telebirr service more time to grow.
Safaricom Ethiopia may succeed with its M-Pesa expansion into Ethiopia if it can replicate its successes in Ethiopia outside of Kenya. This is another early victory for President Ruto, who has already racked up several others, including Safaricom’s decrease of Fuliza loan rates just the previous week.
Connecting people, opportunities, and information has made it easier for people in Kenya to use technology and get money. Safaricom CEO Peter Ndegwa said that they have learned and grown from these things., “We hope to positively impact the people of Ethiopia by building a stable and high-quality mobile network that will serve as a key launch pad for digital telecommunications services to over 118 million Ethiopians.”
Ethiopia is struggling to make more changes to its telecommunications sector. One of these changes is selling 40% of state-owned Ethio Telecoms to private investors. After the French telecom company Orange showed interest, the sale was held because of “fast-moving macroeconomic changes both globally and in the country.
“The 2020 tender gave a license to the Safaricom Ethiopia consortium, which is made up of Safaricom Kenya, which has a controlling stake of 55.7%, Japan’s Sumitomo, the UK’s British International Investment (BII), and Vodacom of South Africa, which has 6.2%.
Vodafone is recognized as a shareholder in Vodafamily Ethiopia Holding, a UK-based company owned by Safaricom (90%) and Vodacom (10%). Vodacom of South Africa is a shareholder in Safaricom.
Kenya Safaricom Ethiopia’s launch comes as the government and leaders of Tigray get ready for peace talks that the African Union will lead. Tigrayan leaders want Kenya’s former president, Uhuru Kenyatta, to lead the negotiations, but Abiy’s government has said it would rather have Nigeria’s Olusegun Obasanjo lead the talks. William Ruto of Kenya asked Kenyatta to be a peace envoy for the Great Lakes Region and the Horn of Africa.
We still don’t know how Safaricom Ethiopia will do. For now, the conversation is overshadowed by the political aspects of Ethiopia’s reform of its private sector and the launch of Safaricom Ethiopia. M-Pesa is available in 9 African countries, but no one has been able to copy its success in Kenya. It may have been partly because it didn’t have the help of Safaricom, which is M-parent Pesa’s company. It might be different this time. Safaricom will be in charge of everything.