Vodacom and partners start work on funding Safaricom Ethiopia
Mobile network group Vodacom and its partners have registered a new company, Safaricom Telecommunications Ethiopia, to provide communications services in the Horn of Africa nation.
The consortium, called The Global Partnership for Ethiopia (GPE), received a new operating licence there in May.
GPE, led by Vodacom affiliate Safaricom, won the licence to operate a mobile network in Ethiopia, the first such award to a private group, as the country looks to open up its telecoms industry to competition.
In 2020, Ethiopia started a bidding process for two new licences to compete with stateowned Ethio Telecom, its only network operator, with about 45-million subscribers.
Mobile network operators including MTN and Vodacom had been eyeing entry into Ethiopia to beef up their operations in Africa and the number of customers that the country would add to their bases.
After losing in the first round, MTN — Africa’s largest operator by subscribers — chose not to compete for the other licence, citing the difficulty of playing catch-up as the number three player in the country.
On Monday, Vodacom said it had agreed with its partners to fund Safaricom Ethiopia according to the shareholding of each member making up the group.
GPE members consist of the UK’s Vodafone, Safaricom of Kenya, Vodacom, Sumitomo Corporation of Japan, the UK’s development finance institution, CDC Group and the US’s International Development Finance
Corporation. Beneficial interests in the consortium see Safaricom holding 55.7%, Sumitomo Corporation 27.2%, CDC Group 10.9% and Vodacom 6.2%.
Without saying exactly how much it would contribute to the effort, Vodacom, which also holds a 35% stake in Safaricom, said the amount was “not expected to be material”.
SA’s largest mobile operator said the new operation would help it diversify its business in Africa, and provide access to a largely untapped market.
“The licence unlocks a unique opportunity for the consortium to build world-class services in Africa’s secondlargest country by population, providing a compelling longterm growth vector for Vodacom and Safaricom.”
The World Bank describes Ethiopia, with a population of about 112-million, as one of the fastest growing countries in East Africa.
Vodacom, valued at about R250bn, said it would “provide strategic operational support” for the Ethiopian operation.
In July, the consortium appointed Anwar Soussa former MD of Vodacom DRC as MD of Safaricom Telecommunications Ethiopia.
Vodacom has granted a put option to CDC Group allowing it to potentially exit its investment in the Ethiopia operation after eight years, capped at $1.74bn (R24.7bn) or about 10% of Vodacom’s market cap.
THE LICENCE UNLOCKS A UNIQUE OPPORTUNITY … TO BUILD WORLD-CLASS SERVICES IN AFRICA’S SECOND-LARGEST COUNTRY BY POPULATION