Safaricom granted mobile money license in Ethiopia

Safaricom has been granted the license to operate mobile money services in Ethiopia seven months after the commercial launch of its GSM network in the country.

Kenya-based Safaricom's M-Pesa was the world's first mobile money transfer system, launching in 2007, and has since grown into a broad mobile financial services offering.

"We are excited that this is a great milestone following our entry into Ethiopia. This positions us to provide essential financial services to the Ethiopian population. We are looking forward to launch and roll out the service over the next few months," Safaricom CEO Peter Ndegwa said on Thursday at the group's results presentation for the year ended March 31, 2023.

M-Pesa now has around 30 million customers who transact, save or borrow money through their mobile phone and has generated over 117.2 billion Kenyan shillings (US$856 million) in revenue during the year, up 8.8%.

A consortium consisting of Safaricom and shareholders Vodacom and Vodafone was awarded an operating license in Ethiopia in May 2021 as part of the Horn of Africa nation's strategy to liberalize the telecoms sector.

Safaricom Ethiopia turned on its network in October 2022 and can now begin extending services to its profitable M-Pesa fintech platform.

M-Pesa remains the biggest revenue earner for Safaricom, accounting for 39.7% of service revenue.

M-Pesa is also available in the Democratic Republic of Congo (DRC), Egypt, Ghana, Kenya, Lesotho, Mozambique and Tanzania.

Safaricom Ethiopia is now present in 22 cities in Ethiopia and covers 22% of the population.

Ethiopia bites into earnings

Safaricom's net income increased by 3% year-on-year (YoY) to KES74.5 billion ($544 million) while service revenue increased by 5.2% to KES295.7 billion ($2.16 billion).

The Ethiopia expansion did, however, have an impact on group earnings before interest and tax which dropped 22% YoY to KES84.99 billion ($620.8 million).

Group mobile data revenue grew 11.4% to KES54 billion ($395 million), while voice revenue declined by 2.6% to KES81.1 billion ($592 million).

When it came to capital expenditure (capex) Safaricom spent KES55.8 billion ($408 million) in Ethiopia and a further KES40.4 billion ($295 million) in Kenya during the year.

"We are committed to continue investing in our network infrastructure, broadening our product range, and leveraging emerging technologies to enhance our participation in the digital ecosystem," the CEO said.

Safaricom's capital expenditure for the financial year ended March 31, 2023. (Source: Safaricom financial results statement FY23)

"We have delivered a solid set of results despite the tough operating environment occasioned by slowdown in business activity in an election year in Kenya, tough macro environment as well as change in mobile termination rates which impacted our voice revenues significantly," Ndegwa added.

He said the business is stable and regained a strong positive momentum in the second half of the year.

Safaricom's total customer base grew 8.1% YoY to 45.9 million, with Ethiopia now having 3 million customers and growing its distributor network to 114 outlets.

"We will also continue deepening our sustainable business and social responsibility agenda focused on healthcare, education, economic empowerment, the environment and reducing our carbon footprint," Ndegwa added.

The group has upgraded 23% of its sites to solar, around 1,400 sites, saving 22% on energy costs from those sites.

Safaricom launched 5G in October 2022 and now has 205 5G sites which cover 23 of Kenya's 47 counties. The group is targeting 800 5G sites by the end of March 2024.

*Top image is of Safaricom CEO Peter Ndegwa, speaking in Nairobi, Kenya on May 11, 2023, during the group's results presentation for the year ended March 31, 2023. (Source: Safaricom)

— Paula Gilbert, Editor, Connecting Africa