Safaricom has revived plans to borrow from both local and international investors ahead of the rollout of commercial operations in Ethiopia this year. The telco giant’s CEO Peter Ndegwa said the firm had revived credit talks with local commercial banks and the International Development Finance Corporation (IDFC). Plans to secure credit facilities from the parties had been stalled by the Tigray conflict in Ethiopia.
Last year, the Safaricom-led consortium for the Ethiopian venture had signed an agreement to borrow up to $500 million (Sh57.5 billion) from the IDFC to facilitate the telco’s expansion into the Ethiopian market.
“We have made significant progress towards a commercial launch. We are engaging with the Ethiopian Communications Authority and other relevant partners about the requirements for ensuring a commercial launch this year,” Ndegwa said.
Ndegwa was speaking at the investor briefing for the 2021 full-year financial results, adding that Safaricom Ethiopia had recruited over 300 staff, 50 percent of which is local talent.
The company has also hired distributors, acquired four retail sites, and opened Addis Ababa’s first outsourced call center.
”Safaricom Ethiopia has secured approvals for tower development, built two data centres, made the first test call, sent out the first test SMS and completed the first data session,” Ndegwa said.
The consortium which won the $850 million (Sh97.8 billion) bid to set shop in one of Africa’s largest telecommunications markets comprises Safaricom’s parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan’s Sumitomo Corporation.
In addition, the telco hopes to provide mobile financial services to Ethiopia, subject to the government’s licensing and regulatory process.
Safaricom incurred a financial cost of Sh4.7 billion to set up the Ethiopian subsidiary, lowering its net earnings for the financial year under review by 1.7 percent to Sh67.5 billion.
Despite this, profit after tax excluding Ethiopia increased by 12.2% to Sh77 billion, returning to pre-Covid-19 levels. The company’s net income increased 5.4% to Sh72.35 billion, while service revenue increased 12.3% to Sh281.11 billion.
M-Pesa’s revenue surpassed Sh100 billion to reach Sh107.7 billion during the year under review, boosting earnings before interest and taxes (EBIT) by 13.5 percent to Sh109.13 billion. Revenue from voice services increased by 0.8 percent to Sh83.21 billion, while revenue from mobile data increased by 8.1 percent to Sh48.44 billion.
”Our strong growth and achievements this financial year are due to the strong strategy execution, a dedicated staff force, and the business commitment to prioritize the needs of our customers,” Ndegwa said.
The company’s continuous focus on consumers resulted in a 6.4 percent growth in one-month active subscribers to 42.44 million during the period, with customers expanding across all income streams.
The telco spent approximately Sh39.34 billion in Kenya on capital expenditures (CAPEX) to maintain and develop the network and ensure that Kenyans have reliable network coverage and data services.