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Safaricom is considering buying a stake in Ethiopia’s State-owned Ethio Telecom, which has announced the sale of shares through a privatisation plan.
Michael Joseph, Safaricom's interim CEO, Thursday said that the Nairobi bourse-listed telecom operator is considering buying a stake in the world’s largest telecoms monopoly or setting shop in Ethiopia from scratch.
His comments came on a day when Ethiopian authorities launched the search for an adviser on the sale of a stake in its national operator, opening the country’s telecoms market to foreign investment for the first time.
“We are looking at all options,” Mr Joseph told the Business Daily in interview on Safaricom’s plan to either buy a stake in Ethio Telecom or seek a licence to start operations.
Safaricom, like a number of global telecom firms including Vodafone, MTN, Orange, Etisalat and Zain, have all expressed interest in gaining access to Ethiopia’s fast-growing mobile market.
For Safaricom, an acquisition would provide an easy solution compared to setting up its own shop, which could involve buying land, putting up buildings, hiring staff, recruiting subscribers and growing market share against a dominant player like Ethio Telecom.
Besides the telecom, the Ethiopian government last year announced plans to open up Ethiopian Airlines, the State logistics firm and the power monopoly to private investment.
The telecommunications monopoly is seen as the biggest prize due to its huge protected market. Ethio Telecom’s subscriber base of 44 million makes it the biggest single-country customer base of any operator in Africa.
Growth potential
Players like Safaricom are attracted by the growth potential in the Ethiopian market, whose 100 million population offers the country a penetration of 44 percent.
Kenya’s 52.2 million mobile phone subscribers gives it a penetration of 109.2 percent. Ethio Telecom last year generated revenues of Sh124.5 billion (about $1.2 billion), which is nearly half the Sh250.9 billion that Safaricom posted in the year to March.
From a cash perspective, a deal for Ethio Telecom will not be difficult for Safaricom, Kenya’s most profitable company, which is cash rich.
Safaricom’s cash at bank stood at Sh20 billion at the end of March, up from Sh9.3 billion in a similar period a year earlier.
The firm started distributing gross dividends amounting to Sh74.9 billion more than two-and-a-half months ahead of the scheduled payment date of November 30, underlying the strong cash flows at the telco.
“Buying Ethio is the best investment Safaricom can make. They can use the firm as a platform to launch mobile money, which has huge potential in Ethiopia,” said George Bodo, a financial analyst and director at Callstreet Investor Relations.
www.businessdailyafrica.com
Michael Joseph, Safaricom's interim CEO, Thursday said that the Nairobi bourse-listed telecom operator is considering buying a stake in the world’s largest telecoms monopoly or setting shop in Ethiopia from scratch.
His comments came on a day when Ethiopian authorities launched the search for an adviser on the sale of a stake in its national operator, opening the country’s telecoms market to foreign investment for the first time.
“We are looking at all options,” Mr Joseph told the Business Daily in interview on Safaricom’s plan to either buy a stake in Ethio Telecom or seek a licence to start operations.
Safaricom, like a number of global telecom firms including Vodafone, MTN, Orange, Etisalat and Zain, have all expressed interest in gaining access to Ethiopia’s fast-growing mobile market.
For Safaricom, an acquisition would provide an easy solution compared to setting up its own shop, which could involve buying land, putting up buildings, hiring staff, recruiting subscribers and growing market share against a dominant player like Ethio Telecom.
Besides the telecom, the Ethiopian government last year announced plans to open up Ethiopian Airlines, the State logistics firm and the power monopoly to private investment.
The telecommunications monopoly is seen as the biggest prize due to its huge protected market. Ethio Telecom’s subscriber base of 44 million makes it the biggest single-country customer base of any operator in Africa.
Growth potential
Players like Safaricom are attracted by the growth potential in the Ethiopian market, whose 100 million population offers the country a penetration of 44 percent.
Kenya’s 52.2 million mobile phone subscribers gives it a penetration of 109.2 percent. Ethio Telecom last year generated revenues of Sh124.5 billion (about $1.2 billion), which is nearly half the Sh250.9 billion that Safaricom posted in the year to March.
From a cash perspective, a deal for Ethio Telecom will not be difficult for Safaricom, Kenya’s most profitable company, which is cash rich.
Safaricom’s cash at bank stood at Sh20 billion at the end of March, up from Sh9.3 billion in a similar period a year earlier.
The firm started distributing gross dividends amounting to Sh74.9 billion more than two-and-a-half months ahead of the scheduled payment date of November 30, underlying the strong cash flows at the telco.
“Buying Ethio is the best investment Safaricom can make. They can use the firm as a platform to launch mobile money, which has huge potential in Ethiopia,” said George Bodo, a financial analyst and director at Callstreet Investor Relations.
Safaricom seeks to acquire stake in Ethiopia telco
Addis company is the world’s largest telecoms monopoly
www.businessdailyafrica.com
