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Analysts say Buying Ethio is the Best Investment Safaricom can Make

Kenya’s telecoms major, Safaricom is looking to put together a group of investors ahead of its bid for one of two Ethiopian telecoms licenses later this year. The decision to form a consortium for the bid, expected in April, is because of the high entry costs. Reports indicate an expansion into the Horn of African nation will most likely cost more than $1 billion for license fees and network expenses. The planned issuance of network licenses in Ethiopia is part of a broader economic reform initiated by Prime Minister Abiy Ahmed, who promised to open up the state-controlled economy – particularly banking, telecoms, and aviation sectors – to foreign investment when he assumed office in April 2018. Besides awarding telecoms permits, Ethiopia also plans to sell a minority stake in its state-run Ethio Telecom to a strategic investor. Experts say acquiring that stake would be a better option for Safaricom than setting up its own subsidiary, which would involve buying land, constructing buildings, recruiting staff and growing its market share against the dominant state monopoly. Ethio Telecom has a subscriber base of 44 million people, making Ethiopia the largest single-country customer base in Africa.

SOURCE: VENTURES AFRICA

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