Ethiopia’s state owned telecoms network Ethiotel is in for stiff competition for the first time as a Safaricom-led investor group, which includes Vodacom, has launched mobile services in the country after securing an operating licence from the government.

A Safaricom-led investor group, which includes South Africa’s Vodacom, has launched mobile services in Ethiopia after securing an operating licence from the government in 2021.

At the same time, Safaricom Ethiopia has been granted a mobile financial services licence, allowing it to launch mobile money services in the East African country. 

Safaricom, which is 34.9% owned by Vodacom Group, is the lead in the investor group, which, according to Safaricom’s 2022 annual report, is made up of:

Vodafamily Ethiopia Holding Company, with a 61.9% stake (the main shareholder being Safaricom with an effective 55.7% of Safaricom Ethiopia, and Vodacom holding an effective 6.2%).

Japan’s Sumitomo Corporation, with 27.2%.

British International Investment, formerly CDC Group, with 10.9%.

Through its 34.9% stake in Safaricom and its 6.2% direct stake in Safaricom Ethiopia, Vodacom Group holds an effective 25.7% interest in the Safaricom Ethiopia business.

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Vodacom rival MTN Group had also expressed an interest in securing a licence in Ethiopia but, after having its initial application rejected, has said it is no longer interested in the East African market.

Safaricom Ethiopia on Thursday switched on mobile services in Addis Ababa, the country’s capital.

Safaricom Ethiopia is the first licensee to challenge Ethio Telecom, the state-owned monopoly. Ethiopia is one of the few remaining telecommunications markets worldwide to be opened to competition.

“Safaricom Ethiopia’s 2G, 3G and 4G mobile services are available in 11 cities from today, including the capital and the country’s second largest city of Dire Dawa,” Vodacom said in a statement.

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“The company plans to launch services in a total of 25 cities by April 2023 to meet the 25% population coverage obligation in its licence.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Safaricom Telecommunications Ethiopia, which received an operating license in Ethiopia in May 2021, has begun work on telecom expansions in the national information and communication technology (ICT) park, including site selections for 5G trail towers.

Safaricom-Ethiopia is preparing to commence its commercial operations in the next months, with plans to deliver 4G and 5G internet services. According to reports, the company plans to launch a low-orbit satellite by 2023 to give statewide 4G connectivity.

Safaricom is working to develop towers, fiber extensions, broadband connections, and other infrastructure within the ICT park as part of its network expansion. “We’re pressing them to create a permanent office in the park and operate as our strategic partners,” said Surafel Shimels, General Manager of ICT Park, adding, “They’ve visited the park and seen all of the choices to invest in, and we expect positive feedback in this regard.”

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Safaricom has completed its site selection and is preparing to install its 5G network towers in the park, according to him.

Safaricom Ethiopia, a joint venture between Safaricom, Sumitomo Corporation, CDC Group, and Vodacom, has received an operational license from the Ethiopian government to operate as a second telecom operator after the state-owned Ethio Telecom. To obtain the license, it had to pay the government USD 850 million and vow to invest up to USD 8.5 billion over the next decade.

The partnership is now hiring people in preparation for the business’s operational launch, which will be known as Safaricom Ethiopia. This confirms Safaricom’s ambitions, which were previously known when it announced plans to lease an office.

Safaricom hired eight middle-level management professionals for its Ethiopian business before the end of last year in order to establish a pool of talent. The consortium is working to lease and occupy an office building in Addis Ababa by the beginning of this year as a platform for its operations in Ethiopia. When it begins commercial operations, the company intends to utilize the same 07 mobile number prefix it has in Kenya.

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For its infrastructure expansion in Ethiopia, the private telecommunications operator is collaborating with global telecom giant Nokia and Chinese global telecom giant Huawei.

Ethio telcom is also constructing a headquarters in the park. In related news, Ethio telcom is preparing to launch its 5G network for the first time in the country, making Ethiopia the first African country to do so.

5G is expected to be deployed to deal with the increasing volume of data transmission in the country’s dense metropolitan networks, and will be updated to the existing 4G infrastructure to help meet user demand while addressing data traffic.

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Safaricom, one of Africa’s largest telecom operators, has started evacuating staff from Ethiopia, fearing disruption to its operations due to the ongoing armed conflict and civil unrest in the Horn of Africa country.  Safaricom said it started evacuating employees from the country on Wednesday and Friday.Safaricom is part of a larger consortium that is aiming to start operations in Ethiopia sometime next year, after months of negotiations with the Ethiopian government. The Safaricom consortium was awarded an operating license in the country by the government for an initial period of 15 years.

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A number of nations, including the US, Denmark and Italy have asked their citizens to leave the Ethiopia region while commercial flights are still available.“All our staff are safe. A number have been evacuated from Ethiopia on a temporary basis whilst we assess the situation,” said a top official at Safaricom, who remained anonymous. Separate reports indicate that the evacuated Safaricom staff were taken to Nairobi via commercial flights in batches.“They were evacuated on Wednesday and others on Friday last week,” another source said. Safaricom has installed staff in Ethiopia to run its operations in the country for products and network development, with the telco hoping to gain some of the market share currently being hoarded by state-owned monopoly Ethio Telecom.The conflict in the country, which was at one point was expected to quickly be resolved, has only escalated in recent months, and armed forces from the Tigray People’s Liberation Front (TPLF) and its allies, called ‘rebels’ by the Ethiopian government, are currently advancing upon the capital city, Addis Ababa.

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Despite calls for ceasefires and peace talks from African nations, including neighbour Kenya, as well as Western states and the UN Security Council, Prime Minister Abiy Ahmed’s government has promised to keep fighting. In a now-deleted Facebook post, Ahmed called on all citizens in the capital to fight for their homes and neighbourhoods against the TPLF.Thousands have been killed and more than two million more have been displaced from their homes, while 400,000 people in Tigray are now facing famine due to the conflict. The war is also destabilising Ethiopia, the second-most populous country in Africa seen by major companies across the continent as fallow ground for investments.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry