Safaricom Plc, Kenya’s telecommunication giant, was on Saturday awarded a license to operate telecommunication services in Ethiopia in a consortium made up of Vodafone, Japan’s Sumitomo and UK finance agency CDC Group.
The Consortium paid $850 million for the license, beating South Africa’s MTN, which had also bid for a license with an offer of US$600 Million.
The partners in the Safaricom led consortium, will establish a new operating company in Ethiopia (Vodafamily Ethiopia) with an aim to start providing telecommunications services in the country from 2022.
Ethiopia is a good opportunity for the telecommunication company seeing it is home to over 112 million people, making it the second-largest country in Africa by population. Although It is one of the last countries in the world to introduce competition in the telecom industry, a rigorous process started by the government in 2019 as part of its Economic Reform Agenda, with the support of the International Finance Corporation.
According to Prime Minister Abiy Ahmed, the $8 billion investment in the country’s telecom industry is considered the most significant foreign direct investment into Ethiopia to date.
“We want to make a real difference to the lives of Ethiopians through promoting widespread digital inclusion as part of Vodacom’s pledge to connect the next 100 million Africans by 2025.” Prime Minister Abiy Ahmed
The reforms aim to increase jobs, reduce poverty and grow the local economy in an inclusive and sustainable manner.
Safaricom Shares Rally
Following the announcement, shares of Safaricom Plc rallied on Monday on the Nairobi Securities Exchange, hitting an all-time high of kes 43.45 and closed at Kes 41.75 as investors reacted to the news of the Ethiopia license.
The telecommunication giant recorded the highest volume of 8.5 million traded shares.
“We are excited for the opportunity to work with the people of Ethiopia to set up telecom networks to deliver a digital lifestyle. In past years, we have seen the power of digital transformation and its impact on our customers. We believe by working with all stakeholders in Ethiopia, we can deliver a similar transformation while achieving a sustainable return to our shareholders.” Peter Ndegwa, CEO Safaricom.