Africa-Press – Kenya. Safaricom Plc will borrow both internally and externally as it plans to set up commercial operations in Ethiopia this financial year.
Speaking at the investor briefing for the 2021 full-year financial results, the telco’s chief executive officer Peter Ndegwa said that the firm is in talks with local commercial banks for a credit facility but declined to give more details.
He added that the Safaricom-led consortium for the Ethiopian venture has revived credit talks with America’s sovereign wealth fund, International Development Finance Corporation (IDFC) stalled by the Tigray conflict.
Last year, the consortium signed an agreement to borrow up to $500 million (Sh57.5 billion) from IDFC to fund expansion into Ethiopia’s telecommunications market.
“We have made significant progress towards a commercial launch. We are engaging with the Ethiopian Communications Authority and other relevant partners about the requirements for ensuring a commercial launch this year,” Ndegwa said.
The consortium that includes Safaricom’s parent firms Vodafone and Vodacom, British development finance agency CDC Group and Japan’s Sumitomo Corporation won an $850 million (Sh97.8 billion) bid to set shop in the landlocked country in May last year.
In readiness for the commercial launch, Safaricom Ethiopia has recruited a team of over 300 staff, of which 50 per cent is local talent, with plans of reaching 1,000 in the next financial year.
The business also has onboarded distributors, secured four retail shop locations and set up the first outsourced call centre in Addis Ababa.
“Safaricom Ethiopia has secured approvals for tower development, built two data centres, made the first test call, sent out the first test SMS and completed the first data session,” Ndegwa said.
The telco also wants to bring mobile financial services to Ethiopia subject to the licensing and regulatory process by the government.
The initial plans to set up the Ethiopian subsidiary saw Safaricom incur a financial cost of Sh4.7 billion, pushing down its net earnings for the financial year under review by 1.7 per cent to Sh67.5 billion.
Even so, profit after tax excluding Ethiopia rebounded to pre-Covid-19 levels, growing by 12.2 per cent to Sh77 billion.
The firm’s net income increased by 5.4 per cent to Sh72.35 billion while service revenue rose by 12.3 per cent to Sh281.11 billion.
Earnings Before Interest and Tax (EBIT) grew by 13.5 per cent to Sh109.13 billion propelled by M-Pesa whose revenue crossed Sh100 billion mark to hit Sh107.7 billion during the year under review.
Voice service revenue grew by 0.8 per cent to Sh83.21 billion while mobile data revenue grew by 8.1 per cent to Sh48.44 billion.
“Our strong growth and achievements this financial year are due to the strong strategy execution, a dedicated staff force, and the business commitment to prioritize the needs of our customers,” Ndegwa said.
The continued focus on customers led to a 6.4 per cent increase to 42.44 million in one month active subscribers for the period, with customers growing across all revenue streams.
The telco invested over Sh39.34 billion in Capital Expediture (CAPEX) in Kenya to maintain and expand the network and ensure Kenyans enjoy reliable network coverage across the country and uninterrupted data services.