Why Safaricom could be engaged in telecoms war

A telecoms war could be in the offing and Safaricom may well be one of the players. With the giant telco seeking to expand its coverage and take its operations into newer markets, its push could meet stiff competition within East Africa.

Plans to take mobile phone money transfer service M-Pesa to another East African country besides Tanzania have been mooted for some time now. With sweeping changes accompanying the liberalisation of the Ethiopian market starting to take shape, it has been no surprise that Kenya’s largest mobile phone operator has eyed the country’s northern neighbour as a potential expansion ground.

Except, of course, that Safaricom is not the only one.

South African, Middle-Eastern, French and Vietnamese telecoms could also be in the scramble for control of one of Ethiopia’s largest monopolies.

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A reported 60 million subscribers comprise Ethiopia’s phone monopoly, all housed under the umbrella of state-controlled Ethio-Telecom. However, the ascension into power of Prime Minister Abiy Ahmed in April is set to see all that change.

The new PM has began a process of opening up the markets and privatisation of state owned firms including Ethio-Telecom and Ethipian Airlines are on the agenda. For the telecommunications industry, plans could include the sale of a minority stake in Ethio-Telecom or the issuance of licenses to new operators. Or a combination of both.

At an estimated 100 million people, Ethiopia is the second most populous sub-saharan country and it is no surprise that international telcos are seeing this as the perfect opportunity to penetrate what has for years been one of Africa’s most guarded markets.

The scrimmage has caused Ethiopian Investment Commission (EIC) head Belachew Mekuria to remark that everyone is coming. “Everyone is here. MTN is here, Safaricom. I mean everyone is coming,” he told Reuters.

Everyone of course includes Safaricom, who have been reported to be in “advanced talks” to introduce M-Pesa in Ethiopia. In fact, international media agency Reuters talked to Belachew ‘following an evening meeting with an executive from Kenyan mobile operator Safaricom.”

South African based MTN are also reportedly in the hunt after saying the Ethiopian market “would be a natural fit” just last month.

Vienam’s largest mobile phone network Viettel is also one of the telcos interested in venturing into Ethiopia. A company official intimated to Reuters that the company prefers the option of granting new operation licences as this will “create better competition for telcos”. But the Vietnamese company that already operates in Mozambique, Burundi, Cameroon and Tanzania would also be interested in any potential offerings for buying a minority stake in Ethio-Telecom.

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France’s Orange, Emirati based Etisalat and Zain Group of Kuwait are also rumoured to be potential players monitoring the progress of the changes taking effect in Ethiopia’s telecommunications sector.