Shares of Kenyan telecommunications operator Safaricom surged more than 9% on Friday after it secured a mobile financial services licence in Ethiopia.
Ethiopia’s finance minister, Ahmed Shide, said on Thursday 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.
“It (the 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, whose partners include South Africa’s Vodacom Group and Britain’s Vodafone Group, five years to break even without a mobile money licence, but now it could take three years, Kimathi said.
Safaricom’s main competitor, the state-run Ethio Telecom, 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.
M-Pesa was among the world’s first mobile transfer services in 2007. It has since evolved to a fully-fledged financial service offering payments services, savings and credit in several African nations.
Safaricom executives said they also see huge opportunities in Ethiopia to provide Internet access.
Also Read: Safaricom switches on Ethiopia network
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.
Abiy’s efforts to attract investment have, however, been damaged by a war in the northern region of Tigray, which has killed thousands and displaced millions.
