Safaricom Ethiopia set to surpass Kenyan operations

Safaricom's Ethiopia subsidiary is set to surpass its 20-year-old Kenyan business. [Elvis Ogina, Standard] Safaricom Ethiopia is on track to surpass its Kenyan lead office in the next few years, in what could soon shift the focus of East Africa's most profitable firm from Nairobi to Adis Ababa. According to the firm's latest financial numbers, Safaricom's Ethiopia subsidiary launched in 2022 is set to surpass the 20-year-old Kenyan business in the next few years in terms of subscribers, network infrastructure, jobs and earnings. This comes on the back of a rapid infrastructure build-up that has so far seen the Ethiopia subsidiary boast network coverage that is a third of Kenya's in less than two years of launching commercial operations. "We take pride in our achievements having launched over 2,200 sites so far in 33 cities, acquired over four million customers and attained 33 per cent population coverage within 15 months of our commercial roll-out," said Safaricom Ethiopia Chairman Michael Joseph. This network coverage is significant compared to Safaricom Kenya, which currently has 6,300 base stations built over the past 20 years. In the year ended March 2023, Safaricom spent a total of Sh96.1 billion in capital investment, more than half of which (Sh55.7 billion) went to the Ethiopian unit. The same applies to the company's mobile money and data businesses, which have reported a meteoric rise in subscribers and usage in the first year of launch. As of 31st December last year, Safaricom Ethiopia saw 3.1 million new M-Pesa customers, equivalent to 10 per cent of the total customer base. Safaricom Ethiopia CEO Vim Vanhelleputte is bullish about the network infrastructure the firm has rolled out in the country over the past year and the prospects of success leveraging the Kenyan market. "When we did our first call in August 2022, we had about 100 sites, and today we have 2,242 sites live working and running as of the end of December 2023," he explained. "Over 18 months, we are building 125 sites every month and we are also testing 5gG in Addis where we have about 25 to thirty sites that are live." According to Mr Vanhelleputte, the rapid market rollout and growth in overall subscribers is pegged on Ethiopia's large population which is also unbanked, presenting a big opportunity to scale up mobile financial services. With more than 120.3 million citizens spread across a 1.1 million square kilometre landmass, Ethiopia is more than twice the size of Kenya and this points to opportunities to double the eye-watering earnings reported by Safaricom in Kenya over the years. "Three million Ethiopians turn 18 years old every year, which means every year we are adding the equivalent of one and a half the population of Lesotho as an addressable market in Ethiopia so we have to be there," explained Mr Vanhelleputte. Safaricom Ethiopia also has the advantage of side-stepping some of the growing pains that M-Pesa reported in Kenya. This includes regulatory hurdles by financial sector watchdogs that have since been addressed and the existence of the M-PESA Super App that eases the onboarding of new and younger customers. This is expected to help M-Pesa quickly build up traction, usage and revenues, a fact that is not lost on the firm's management. President William Ruto in Addis Ababa for bilateral talks with Prime Minister Abiy Ahmed during the launch of Safaricom Ethiopia. [PCS] According to Mr Vanhelleputte, the existence of the business, data and technological infrastructure already in place means onboarding new customers can happen instantly, with customers in Ethiopia able to access the same services and benefits enjoyed by their counterparts in Kenya. "We have the whole gamut of products and services available, we just need to push a button," he said. "We have another lending and savings product that already runs in Kenya that we can easily copy-paste and leap-frog." "The point we have to understand is we have to leap-frog," said Mr Vanhelleputte. "We are not on the traditional journey, we are on a leap-frogging journey so we go straight into merchant payments, utility payments, government payments, savings and lendings and into using the app." Mobile data has also emerged as one of the leading strategies that Safaricom is pushing to advance market share in Ethiopia. Last year, the firm's network, currently billed as the fastest mobile data network in Ethiopia, reported higher average usage per customer figures compared to Kenya. This has prompted a strategic shift in how the firm is positioning and marketing its digital services offering. "Previously, we were going to market primarily through a product lens," explained Safaricom CEO Peter Ndegwa.

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