Ethiopia Lunch Brings Safaricom Shares Surge

Oct 8 , 2022

Last week’s launching of telecom services by the Kenyan-led consortium, Safaricom Ethiopia Plc, not only broke a century-old monopoly by a state-owned enterprise. The news brought good fortune to the company, seeing its share values surge after Ethiopian authorities announced that they decided to grant it a permit for mobile financial services. Ahmed Shidie, finance minister, told an audience gathered at Friendship Square on Thursday, September 6, that Safaricom’s M-PESA can operate in the Ethiopian market that has remained closed to competition for over 100 years. Safaricom became the first private operator in Africa’s largest telecom markets, with a population of over 100 million people. Safaricom's shares jumped more than six percent to 0.3885 dollars. "This was baked into the price," a Nairobi-based trader told Reuters. "I think it's a bit of a sugar rush, to last a day or two, and then we move back." A consortium of companies, including the South African Vodacom, the British Vodafone and Japan’s Sumitomo Corporation, won an operating license outbidding its contenders by offering 850 million dollars. Over a year in preparation, Safaricom Ethiopia switched its network in Addis Abeba last week, after piloting its services in 10 cities, mainly Dire Dawa. The company plans to cover no less than 14 cities by mid-next year. “We’re optimistic about how the technology and connectivity we provide contribute to a digital future and eventually transform people’s lives,” Safaricom CEO, Peter Ndegwa, said. The decision to allow Safaricom to begin mobile money service has not been in the initial deal, however. Anwar Soussa, CEO of Safaricom Ethiopia, pledged to roll out the service in three months. Safaricom is credited for being a pioneer in mobile phone-based money transfer, launching M-PESA 15 years ago. Almost half of the company’s revenues come from its mobile-payment services. “Safaricom’s success story is such an enduring innovation of how tech revolution is bypassing traditional barriers to deliver sustainable prosperity”, Kenya’s President William Ruto tweeted. Ruto attended the launch last week, making his first trip to an African country after his August election.