Kenya's telecommunication giant Safaricom eyes Ethiopian market amid ethic violence

NAIROBI, Kenya - Despite the ongoing Ethiopian ethnic violence, Kenya's telecommunication giant Safaricom has expressed interest in venturing the Horn of Africa market.

Ethiopia is struggling to restore order after weeks of lawlessness that saw at least 78 people killed at Oromia region in the last week.

Prime Minister Abiy Ahmed, who recently won Nobel Peace Prize, has blamed media entrepreneur Jawar Mohammed for allegedly orchestrating violence.

But Safaricom which has already registered a new profit of 14 percent on the lady six months, is contemplating to join the Ethiopian market.

In the has six months, the company's profit increased from Ksh31 billion to Ksh35 billion despite internal reorganization which is currently going on.

According to the group chairman Nicholas Nganga, the company was able to record profit based on a significant increase in M-Pesa customers and through data bundles.

“In the past year, many organizations faced significant business challenges due to rising costs, reducing customer purchasing power and an increase in regulatory actions.

"A good number of Kenyans lost their jobs in the last one year through retrenchments, involuntary retirements, and business closures. Fifteen listed companies at the Nairobi Stock Exchange have so far issued profit warnings,” said Safaricom chairman Nicholas Nganga at an investor briefing yesterday.

Ethiopian government this month plans to auction two telecommunications licenses and bidders have up to the end of this month to express their interest.

The country is also looking to sell a 49 percent stake in Ethio Telecom. Safaricom said it is evaluating the options and would decide whether to buy into the telco or go for a greenfield operation.

“The country is an attractive proposition partly because of the size of the market. We are in talks with Vodacom and Vodafone, to consider what approach we will take… so far nothing has been decided,” said Safaricom outgoing CEO Michael Joseph.

The move that will increase competition in the industry is part of efforts by Prime Minister Abiy Ahmed, who took office last year, to liberalize the economy.

Safaricom last week hired Peter Ndegwa, currently in charge of Diageo’s operations in continental Europe, as its next chief executive. He is expected to start work at the firm on April 1, 2020.

The company suffered a loss this year following the death of Bob Collymore, the CEO who succumbed to cancer in July. Joseph, who was Collymore's predecessor, took over as acting CEO thereafter.

Ever since venturing into Kenyan market a decade ago, Safaricom has almost monopolized local Communication networks. It's mother company; Vodacom, also dominates the South African market.

Ethiopia is currently undergoing an economic revolution since the entry of Abiy, who is keen to trade with Kenya. The PM met President Uhuru Kenyatta last month and the two agreed to work together.

However, despite the interest, Safaricom will have to endure challenges that are given ethnic violence and political polarisation which have eclipsed PM Abiy's regime in the last 18 months.

Reporting by Abuga Makori in Nairobi; Editing by Omar Nor

GAROWE ONLINE