Safaricom sees Ethiopia license offer price drop after government restricts mobile money to domestic businesses

Kenyan operator Safaricom expects a reduced offer price for the Ethiopian market license after news that only locally owned non-financial institutions will be able to offer mobile money services, Business Daily reported. The operator has revealed that its interest in the market of 108 million people and around 50 million phone subscribers would have been significantly enhanced and translated into a higher offer if the Ethiopian government had allowed it to operate M-Pesa there.

Disclosures in a transcript call covering events through the end of July, Business Daily said, reveal that Safaricom sees a no-mobile money license hurting profitability and lengthening the period to recoup investment. CEO Peter Ndegwa said that a license that does not include a mobile money license will significantly reduce the level of profitability and thus essentially Safaricom’s bid price for the license, but also the profitability and payback period. .

Business Daily said that Safaricom has never disclosed how much it is willing to bid, nor the annual growth rate that investment in Ethiopia is expected to generate, calling it competitive and sensitive information.

Vodafone Business Chief Financial Officer (CFO) Sateesh Kamath, who used to serve as Safaricom’s CFO, said that only a mobile money license would improve the bid price.

Safaricom made its application for Ethiopian licenses through a consortium that includes its parent companies Vodafone and Vodacom.