Kenya's Safaricom plans Ethiopia expansion after profit jump

Kenya’s Safaricom plans to bid for one of two Ethiopian telecoms licences next year in partnership with South Africa’s Vodacom, it said after posting a jump in first-half profit on Friday.

East Africa’s most profitable company hopes to replicate its Kenyan success in neighbouring Ethiopia, acting CEO Michael Joseph said.

“It is the biggest prize left in Africa from a telecommunications point of view,” he told an investor briefing, referring to Ethiopia’s huge protected market and population of more than 100 million.

Officials plan to award two telecoms licences to multinational mobile companies by April 2020, the Ethiopian communications regulator said last month, as it opens up its market to foreign investors.

Ethio Telecom, the state monopoly, has also taken steps towards offering a minority stake to a strategic investor.

Safaricom is considering all the options, Joseph said. Companies that want to secure the licences have to come with deep pockets, he added.

“You have to bid for the spectrum. There is talk about it and it is in the billion-dollar range, just for the licence,” he told Reuters.

Other challenges include a nascent democracy initiated by Prime Minister Abiy Ahmed, foreign exchange shortages and delayed new regulations for the telecoms sector, he added.

Safaricom has signed an agreement with an unidentified Ethiopian firm to introduce its M-Pesa mobile financial service in the country, said the interim CEO.

PROFIT JUMP

Safaricom, partly owned by Vodacom and Britain’s Vodafone , stuck to its full-year guidance after reporting a 12.7% jump in first-half core earnings, helped by M-Pesa.

Revenue from M-Pesa, which allows users to send cash, save, borrow and pay for goods and services, soared 18.2% in the six months to Sept. 30.

Safaricom’s Service revenue grew at 5.3%, down from 7.7% a year earlier, as the company cut tariffs in response to increased competition and pressure on consumer incomes.

“For a period in which they have cut rates, the revenue growth is acceptable,” said Standard Investment Bank analyst Lisa Kimathi.

Safaricom shares were up 1.5% at 30.20 shillings by 1110 GMT.

https://af.reuters.com/a.../kenyaNews/idAFL8N27H0OW

Safaricom to partner with Vodacom in establishing greenfield operation in Ethiopia

1 Billion dollars??? That translates to 100B KSH. Too high.

WHAT is it with Michael Joseph and reducing prices? He seems to be obsessed with the same! Reminiscing the old days of the price wars that made Safaricom shares tank?

It is a fight for market share. While Safaricoms customers are indeed sticky to Mpesa, the same can not be said of data and voice. To me, however, it seems like the perennial innovation well is running dry. Maybe Ndegwa will help.