Safaricom Ethiopia: IFC Splashes Ksh19.2B on Minority Stake

The International Finance Corporation (IFC) has announced plans to acquire a stake in Safaricom Ethiopia worth Ksh19.2 billion ($160 million). The IFC is the World Bank’s private investment arm.

The Safaricom-led consortium was in May 2021 awarded an operating license in Ethiopia, ahead of fellow bidder MTN.  The consortium, which includes Safaricom’s parent firms Vodafone and Vodacom, as well as British development finance agency CDC Group and Japan’s Sumitomo Corporation won the award after submitting a financial bid of $850 million (Ksh91.8 billion).

The acquisition by IFC would hand it an estimated 15.46% stake in Safaricom Telecommunications Ethiopia (STE) Plc, the operating arm of the venture. It comes amid a large-scale customer pilot of its network being undertaken by Safaricom in three regions of Ethiopia ahead of a national launch slated for October. IFC is also expected to provide debt financing for the venture at a later date. Details were, however, not disclosed as the package is still under discussion.

Safaricom Ethiopia earlier disclosed that it expects to switch on its network in 25 cities in Ethiopia by April next year.

“IFC’s investment will support STE’s countrywide mobile network roll-out and help position the company to comply with the terms of its license, which outlines the requirement for a specified population and geographic coverage targets and reasonable tariffs, universal accessibility and tele density target, amongst others,” IFC disclosed.

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Safaricom is currently the biggest shareholder in the subsidiary, with a 55.7% stake. Other shareholders are Vodacom Group which controls a 6.19% share, and Sumitomo Corporation and British International Investment (formerly CDC Group) with stakes of 27.2 percent and 10.9 percent of the company respectively.

The move by IFC could see Safaricom’s stake in the venture dip below 50%, to around 47.1 percent, reducing its exposure in the Ethiopia business.

Vodacom, Sumitomo and BII would see their ownership drop to 5.23 percent, 22.99 percent and 9.21 percent respectively. IFC would become the third-largest shareholder in Safaricom Ethiopia, following Sumitomo in second place.

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