Safaricom Expects Reduced Ethiopian Licence Bid Price Without M-Pesa

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Safaricom, the leading telco company and mobile money service provider in Kenya, had high expectations of operating in Ethiopia. It would get a significant return if it were allowed by the Ethiopian government to run M-pesa there.

Although the provision would have a higher cost, the returns would be worthy of the investment.

The company’s CEO, Peter Ndegwa disclosed that obtaining an operator’s license without Mpesa will mostly hurt the investment’s profitability. Also, the return on the investment period will be longer.

However, Safaricom will be required to pay much less for the license. The Ethiopian government is encouraging the local owned institutions to offer mobile money services.

By venturing into the Ethiopian market, Safaricom targets 108 million people with over 40% mobile phone subscriptions. Despite this critical disclosure, Safaricom is unwilling to provide details of how much it will be paying for the bid and its expected annual growth rate. It terms that as sensitive information that should not be disclosed to the public.

The Ethiopian Communication Authority revealed it had received 12 applications from interested institutions to issue two telecommunications licenses. Other companies that have expressed interest include Snail Mobile, MTN, Liquid Telecom, among others.

All companies that have expressed interest expect to get the feedback at the end of the year.

 

 

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The Author of this Article is a registered Financial & Investment Analyst with Institute of Certified Investment and Financial Analyst. If your require more information Email: info@finsolutions.co.ke or +254 780216631

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