Kenyan mobile network operator Safaricom shares rose by 9% on Friday, September 7, after the Ethiopian government granted the tech firm licence for its mobile financial services licence.
Executives at Safaricom said they see huge opportunities in Ethiopia to provide internet access.
Ethiopia’s Finance Minister Ahmed Shide in a statement on Thursday, September 6, said his country had given Safaricom the licence in one of Africa’s largest telecoms markets as the company formally switched on the first privately-operated network in the country.
Ethiopia’s telecoms industry is considered the big prize in Prime Minister Abiy Ahmed’s push to liberalise the economy after he took over in 2018, thanks to a large population of 110 million.
“Its licence will bring the break-even period forward by approximately two years,” said Lisa Kimathi, an investment analyst at Standard Investment Bank.
It would have taken Safaricom five years to break even without a mobile money licence, but now it could take three years, Kimathi said.
Safaricom’s main competitor in the mobile market is the state-run Ethio Telecom which launched a mobile phone-based financial service called Telebirr last year, to boost growth by offering cashless transactions.
Telebirr is now used by millions of subscribers but Kimathi said Safaricom’s M-Pesa financial services platform could seize the lead.
President Abiy’s efforts to attract investment in Ethiopia have been damaged by a war in the northern region of Tigray, which has killed thousands and displaced millions.