Inside Politics

Safaricom allays fears over doing business in Ethiopia

Wednesday, May 26th, 2021 00:00 |
Telecommunication tower.

Lewis Njoka@LewisNjoka

Safaricom has allayed fears that Ethiopia’s restrictive regulatory environment will affect actualisation of its new telco licence, saying it has received assurances from the government.

Safaricom CEO, Peter Ndegwa, said the Ethiopian government had assured the licensees that it would create an environment that enables them to repatriate profits and access foreign currency.

“There is real commitment from the Ethiopian Communications Authority and the government that they will facilitate an environment in which the new licensees will be able to operate,” he said.

Despite being considered as one of the most lucrative markets because its population of over 100 million people is the second largest in Africa, Ethiopia is among the last countries globally to open up their mobile telephony to competition.

Refuted claims

Ndegwa who was addressing the press in Nairobi yesterday, refuted claims that the process followed in awarding it a licence to set up services in Ethiopia was opaque, saying it was competitive and transparent.

During the bidding process, only two consortia, the Safaricom consortium and the one led by MTN Mauritius, placed their bids for the licence.

Nine other consortia that had expressed interest earlier are said to have snubbed the process, citing lack of transparency and the requirement that winners build own infrastructure among other reasons.

These included Etisalat, Axian, Orange, Saudi Telecom Company, Telkom SA, Liquid Telecom, Snail Mobile, Kandu Global Communications and Electromecha International Projects.

“As far as we, as a consortium, are concerned, the process was robust, competitive, transparent, and we were kept informed. It was run in a credible way,” Ndegwa said.

He said the consortium was satisfied with the outcome, explaining that the Ethiopian operation was a good opportunity to deliver strong growth for Safaricom in the short to medium term and complement its business in Kenya.

The Safaricom-led consortium will have to compete with the State-owned Ethio Telecom which has a head start considering that it already has GSM and mobile money operations in the country.

Ndegwa said the consortium is not worried about Ethiotel having a head start, but noted that they will collaborate to ensure that the country was covered by mobile telephony in the proper way.

The licence agreement requires the consortium to ensure that the entire country is covered by 4G network by 2023.

It only allows GSM operations with a promise that mobile money services could be allowed in future.

Ndegwa said the consortium would love to begin mobile money operations in Ethiopia as soon as it is practically possible, adding that they have the capability and the skills to roll it out.

Skills and experience

“We bring a blend of skills and experience and also success,” he added.

The holding company for the consortium will be based in Netherlands as the country has a bilateral treaty with Ethiopia. Each of the consortium members will source funds separately.

The consortium hopes to begin operations in Ethiopia in 2022 and will provide business opportunities to between three and four million small and medium enterprises, according to Ndegwa.

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