More Industry InsightsA true success story in Kenya, Safaricom displays its African ambitions (report)

September 19, 2023by myles0

The report highlights that the operator is beginning a process of expansion outside Kenyan borders and is broadening its horizons to the manufacturing of smartphones to compensate for the slowdown in growth observed in the financial services segment.

Building on its resounding success in Kenya and the international reputation acquired by its financial services platform M-Pesa, the Kenyan telecoms operator Safaricom has confirmed its African ambitions with an establishment in Ethiopia and the upcoming launch of a manufacturing plant for affordable smartphones intended to strengthen Internet access on the continent, according to a report published last July by Ecofin Pro, the Ecofin agency platform dedicated to professionals.

Entitled “  After 20 years of success in Kenya, Safaricom prepares its African deployment  ”, the report specifies that Safaricom is already a champion in East Africa. During the 2022/2023 financial year (April 1-March 31), Kenya’s number one telecommunications company achieved a turnover of $2.2 billion for more than $1 billion in earnings before interest, taxes, depreciation and amortization (EBITDA). Performances that make the leaders of the major telecoms markets in the sub-region green with envy ($1.1 billion in turnover in 2022 for Ethio Telecom, $275.6 million for Vodacom Tanzania and $540 million for MTN Uganda).

This rank of East African leader is the result of a proven operational strategy and an aggressive investment aimed at establishing the presence throughout the Kenyan territory and in the different service segments. And the group doesn’t intend to stop there.

In May 2023, it announced the construction of a 4G smartphone assembly plant in Kenya. Through this project, Safaricom plans to put affordable smartphones on the market which will allow it first of all to increase the consumption of its Internet services and its digital offers in Kenya, and to export these devices to other countries in the continent to generate additional income. In sub-Saharan Africa, 60% of the population does not connect to mobile Internet despite being covered by mobile networks. Nearly 700 million people are missing out on the many opportunities the service offers. One of the reasons for this is the high cost of broadband-enabled mobile devices. But Safaricom plans to tackle this affordability problem.

Replicating successes in Ethiopia

The report indicates in this context that the interest in accelerating the deployment of mobile broadband and broadening the group’s field of activity to the manufacturing of smartphones is also explained by the loss of speed observed on the platform. M-Pesa financial services, which includes around twenty products ranging from deposit-withdrawal to savings, including microcredits, payment solutions and local and international fund transfers. The financial services segment contributed $856 million to the operator’s turnover during the 2022/2023 financial year, representing an increase of 8.8% compared to the previous financial year. This increase is, however, more modest than the 30.3% recorded during the 2021/2022 financial year.

But luckily, a new market opened up for Safaricom: Ethiopia. In this new market where it obtained a telecoms license on May 22, 2021, the Kenyan group intends to reproduce the success recorded in Kenya and apply the lessons learned over the last fifteen years of maturation of the M-Pesa mobile money service in Kenya. .

In former Abyssinia, Safaricom could even record even greater revenues than those it achieves in its domestic market given the size of the Ethiopian market, with 66.80 million mobile subscribers in January 2023 compared to 65.74 million mobile subscribers in Kenya as of December 31, 2022. As such, Ethiopia could even represent a beautiful blank page on which the operator could write a new success story even more beautiful than the one started in 2000 in Kenya.

The company’s CEO, Peter Ndegwa, also specified that the year 2024 should not only be that of the consolidation of technological solutions such as the Internet of Things, the cloud, content and financial services, but also that of of scaling Ethiopia’s operations, a country that could be just the first step in a more aggressive African deployment.    

Source: Agence Ecofin

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