Safaricom to Invest Over $300 Million in Ethiopia Operations in First Year of M-Pesa Rollout

Safaricom has announced its plans to invest $300 to $350 million in its Ethiopia operations for the financial year 2024 (FY24), which will include the launch of its mobile money platform, M-Pesa. The telecom operator, having paid $150 million to secure the mobile money license, expects the M-Pesa launch to take place in the coming weeks.

“Safaricom Ethiopia is the biggest investment Safaricom Plc has made. We are the majority shareholder, and we have other minority shareholders. And every one of us is committed to ensuring the long-term success of Safaricom Ethiopia,” said Peter Ndegwa, CEO of Safaricom Plc, during a press briefing held today in Kenya. “That’s why we are promising to deliver an investment level between $300 and $350 million,” Peter added.

While specific numbers for the M-Pesa rollout were not disclosed, Safaricom emphasized that the total investment encompasses the necessary efforts to ensure the success of the platform in Ethiopia.

“The way you set up a mobile money is by starting with creating a network that allows customers to deposit, withdraw, and transfer money from one person to another. That’s the baseline. Once you have that footprint, you can move to other services such as international money transfer, merchants, and more,” stated Peter.

M-Pesa, launched in 2007, has over 32 million users in Kenya and has become a widely adopted and transformative mobile money platform, revolutionizing the way people handle financial transactions and empowering individuals with convenient and accessible digital financial services.

“We have a consortium of investors with a global outlook. We have a significant track record and credentials in mobile money financial services. And that’s what we are bringing to Ethiopia,” Peter added.

The awarding of the mobile money license today April 11, 2023 coincided with Safaricom Plc sharing its audited results for the financial year that concluded on March 31, 2023, providing live insights into the company’s development.

As of March 31, 2023, Safaricom Ethiopia had added 3.0 million customers to the network, generating revenues of approximately $4.1 million (KShs 562.4 million), with 63% from mobile data revenue and 24% from voice revenue. The remainder consisted of messaging and mobile incoming revenues.

The company is encouraged by the level of usage, with an average of 1.5GB data usage and 55.4 minutes of voice usage per month. The operator has also claimed to have the fastest data network in Ethiopia.

In addition, Safaricom has also sold 106,900 handsets since launching, generating revenues of approximately $4.9 million (KShs 676.6 million).

The telecom operator has also hinted that its offerings might improve in the future as it establishes a stronger foothold in Ethiopia.

“You can’t have an enduring offer without having the right network. Today we have less than 1,500 sites. Ethio Telecom has around 7,000. It’s going to take a little bit of time for us to have a strong network that can compete in terms of coverage. The quality is there. It’s a fantastic network. But it has to be rolled out, and that takes time,” said Anwar Soussa, CEO of Safaricom Ethiopia.

“As we do that, you are going to find the affinity for the company and the offerings is going to improve as a natural progression,” Anwar added. The CEO further explained that a price war is not Safaricom’s objective, but it may take a competitive pricing approach to gain a stake in certain parts of the market.

Safaricom Telecommunications Ethiopia Plc launched commercial operations on October 6, 2022, following the phased city-by-city customer network pilots that began on August 29, 2022.

The company is optimistic about the transformative opportunities this presents. Their focus has been on accelerating the rollout, and they have now covered 22 large and medium-sized cities, representing a population coverage of 22%. Plans are underway to expand to the remaining cities, including Assosa, Nekemte, and Mekele.