Leading Kenyan operator Safaricom is reportedly planning to raise up to $2 billion from local banks and development finance institutions over the next five years to fund its new Safaricom Ethiopia operation. Part of the proposed funding will also be raised internally and through rental financing from equipment vendors.
According to the East African news service, Safaricom has so far invested $540 million in Ethiopia, which includes a license payment of $470 million. This was supported by last year’s one-year bridging facility of $400 million, which has since been extended into a five-year long-term facility of $120 million, and a $280 million seven-year facility with a two-year moratorium on principal repayment.
It’s now nearly a year since Safaricom, through the Global Partnership for Ethiopia (GPE) consortium, was awarded an operator licence by the Ethiopian government. The consortium became Safaricom Telecommunication Ethiopia Plc (STE), in which Safaricom owns 55.71%, Vodacom Group Ltd 6.19%, Sumitomo Corporation 27.2% and CDC Group Plc 10.9%.
Though this seems like a long wait, one issue, recently acknowledged by Safaricom, has been the effect of the Tigray crisis which apparently stalled discussions with the International Finance Corporation, though these have now resumed. Safaricom Ethiopia is reportedly set to start commercial operations within the next seven months
The East African suggests considerable capital expenditure in Ethiopia in the coming year – at least half a billion dollars – but, according to Safaricom CEO Peter Ndegwa, this is in line with expectations that the new operation will take a few years to turn a profit.