In this episode, the Hisa team and community discuss the details of Safaricom's entry into Ethiopia, including the investments, possible risks, costs, and short and midterm outlook. We also talk about Equity and KCB's Q1 results and Equity's regional expansion.
Highlights
- The consortium led by Safaricom has committed $8.5 billion over ten years in one of the largest single foreign direct investment into Ethiopia.
- The capital outlay is likely to weigh down on the company's free cash flows, as Safaricom is likely to include the Special Purpose Vehicles' books into its books, given that it owns more than 50% share.
- Without a Mobile money licence at present, Safaricom will have to reduce its telephony charges to compete favourably with Ethio Telecom as it is not a market leader in the Ethiopian market, which could incur losses from voice, data and messaging, likely to be borne by the parent entities of the SPV.
- At early stages, Safaricom needs to increase its market share significantly to obtain pricing power in a market likely to be price competitive.
- Operations in Ethiopia are slated to begin in 2022, awaiting final clearance from the Ethiopian government.
- The Ethiopian market is, however, a massive opportunity given its population estimated at 112 million.