Safaricom bullish on expansion
Safaricom remains committed to investing in excess of Sh150 billion in capital expenditure in Ethiopia despite the political turmoil.
“We remain committed to taking telecommunication and digital services to the people of Ethiopia. The opportunities are immense as shown in the Simcard penetration rates as well as projected gross domestic product (GDP) growth rates,” said Safaricom during an earnings call on Wednesday.
The company is at the same time working to send its employees back home from the troubled nation due to a political conflict that has forced many companies to withdraw their workforce.
American financiers in the Ethiopian deal have withheld their funding for the Safaricom consortium due to the uncertainty. At the moment, Safaricom said it is in the process of setting up operations, preparing detailed plans for operational readiness amongst other requirements, ahead of a commercial launch in 2022.
The telco says they are in contact with the relevant authorities in Ethiopia, updating them as per it’s license obligations.
“We are confident and looking forward to launching commercial operations as projected whilst cognizant of the current evolving situation in Ethiopia, and as we proceed with our plans adapting and assessing the situation as it evolves,” the telco’s CEO James Ndegwa said, adding that the company’s priority now is the safety and security of the small number of employees that had already joined the Ethiopia unit.
“We are forecasting a CAPEX investment of between USD 1.5B- 2B over the next five years to meet the licensed coverage obligations. Together with our partners, we have availed funding to support this new venture which we anticipate breaking even by year four of operations,” Ndegwa narrated in the firm’s earnings report.
Apart from the political risks the company also foresees other risks such as forex availability but said the opportunities far out-way risks.
“Within the investment there are risks and uncertainties. We are aware of and have mapped out possible risk areas and scenarios ranging from implementation of market liberalization and the new regulatory frameworks, the ongoing political conflict, forex availability amongst others,” Ndegwa said.