Kenyan operator Safaricom is considering buying a stake in Ethiopia's state-owned Ethio Telecom, which has announced the sale of shares through privatisation, reports Business Daily. Safaricom's interim CEO Michael Joseph said that the telecom operator is also considering setting up shop in Ethiopia from scratch. His comments came after Ethiopian authorities began searching for an adviser on the sale of a stake in its national operator, opening up the country's telecoms market to foreign investment for the first time.
Joseph said Safaricom is looking at every option and told the Business Daily in interview that Safaricom's plan is either to buy a stake in Ethio Telecom, or to seek a licence to start operations.
Safaricom, Vodafone, MTN, Orange, Etisalat and Zain have all expressed interest in gaining access to Ethiopia’s fast-growing mobile market, said Business Daily. For Safaricom, an acquisition would provide an easy solution compared with setting up its own shop, which could involve buying land, putting up buildings, hiring staff, recruiting subscribers and growing market share against a dominant player like Ethio Telecom. The telecommunications monopoly is seen as the biggest prize because of its huge protected market.
Ethio Telecom’s subscriber base of 44 million makes it the biggest single-country customer base of any operator in Africa. It has a population of 100 million but telecom penetration is 44 percent. Kenya's 52.2 million mobile phone subscribers gives it a penetration rate of 109.2 percent.
In 2018, Ethio Telecom generated revenues of KES 124.5 billion, which is nearly half the KES 250.9 billion that Safaricom posted in the year to March. From a cash perspective, a deal for Ethio Telecom will not be difficult for Safaricom, Kenya’s most profitable company. Safaricom's cash at the bank stood at KES 20 billion at the end of March, up from KES 9.3 billion a year earlier.
