Kenya’s Safaricom plans to expand operations in Ethiopia

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Kenya’s telecom giant Safaricom plans to bid for one of two Ethiopian telecoms licenses in 2020 in partnership with South Africa’s Vodacom after posting a jump in first-half profit.

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The company’s acting Chief Executive Officer (CEO) Michael Joseph flanked by Safaricom chairman Nicholas Ng’ang’a on Friday said they hope to replicate Kenyan success in neighboring Ethiopia.

“It is the biggest prize left in Africa from a telecommunications point of view,” he told an investor briefing, referring to Ethiopia’s huge protected market and population of more than 100 million.

Ethio Telecom, the state monopoly, has also taken steps toward offering a minority stake to a strategic investor.

East Africa’s most profitable company Safaricom is considering all the options, Joseph said. Companies that want to secure the licenses have to come with deep pockets, he added.

“You have to bid for the spectrum. There is talk about it and it is in the billion-dollar range, just for the license,” he told Reuters.

Other challenges include a nascent democracy initiated by Prime Minister Abiy Ahmed, foreign exchange shortages and delayed new regulations for the telecoms sector, he added.

Safaricom has signed an agreement with an unidentified Ethiopian firm to introduce its M-Pesa mobile financial service in the country, said the interim CEO.

Safaricom, partly owned by Vodacom and Britain’s Vodafone, stuck to its full-year guidance after reporting a 12.7% jump in first-half core earnings, helped by M-Pesa.

Revenue from M-Pesa, which allows users to send cash, save, borrow and pay for goods and services, soared 18.2% in the six months to Sept. 30.

Its service revenue grew at 5.3%, down from 7.7% a year earlier, as the company cut tariffs in response to increased competition and pressure on consumer incomes.

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