Kenyan operator Safaricom is investing an initial KES 67 billion (USD 593 million)in Ethiopia for its new telecommunications partnership, The Nation reported. The amount is Safaricom’s contribution to the start-up costs and operating license, for which the consortium paid USD 850 million. The consortium will spend more on infrastructure and other costs to operationalize the business.
The telecom holds a 55.7% stake in the new entrant through the Global Partnership for Ethiopia (GPE) consortium, with other partners including its parent company Vodacom Group, Japan’s Sumitomo Corporation and CDC Group, which is owned by the UK government.
Safaricom CEO Phillip Ndegwa said they expect capital expenditure of between USD 1.5 billion and USD 2 billion over the next five years to meet the license coverage obligations. Safaricom says it will finance the big-ticket investments through its own funds and loans from local banks and development finance institutions. Safaricom has already borrowed KES 43 billion to fund a portion of the Ethiopian investment. The consortium pledged to invest a total of USD 8 billion over ten years, including the cost of building telecoms infrastructure.
Details of the Ethiopian investment were made as Safaricom revenue rise ended 30 September, which saw net income rise 12.1 percent, helped by revenue growth as the company reinstated charges on M-Pesa transactions of less than KES 1,000.