June 20, 2024

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Safaricom Entering Ethiopian Bond Market

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Safaricom wants to get money from Ethiopia’s bond market to help it grow in East Africa.

In 2021, Safaricom started working in Ethiopia after paying 850 million dollars for a license. This was the first time they operated outside Kenya, trying to make use of the opportunities in the second biggest country in Africa.

After more than a year, Safaricom in Ethiopia has many customers. They have 4.4 million people using their mobile service regularly and 4.5 million signed up for their M-Pesa mobile money. M-Pesa handled 31.5 million transactions worth 56 billion Ethiopian birr (equal to KES 24.5 billion) during this time.

In terms of infrastructure, Safaricom Ethiopia has deployed services across 2,806 telecommunication towers and has a network of 62,700 active agents. This extensive coverage reaches a significant portion of Ethiopia’s population and is steadily expanding nationwide.

In the year ending March 2024, Safaricom Kenya’s profits increased by 13.7% to Ksh84.74 billion, but a loss of Ksh42.09 billion from Safaricom Ethiopia caused the group’s overall earnings to drop to Ksh42.66 billion. This marks the fourth year in a row that the company’s total earnings have decreased.

CFO of Safaricom Dilip Pal mentioned that Safaricom, listed in Nairobi, aims to raise between 100-150 million dollars through the issuance of bonds denominated in Ethiopian birr. At the higher end, this could amount to 8.6 billion birr. These funds are intended to support Safaricom’s ongoing capital-intensive expansion efforts throughout Ethiopia.

Safaricom’s planned bond issuance is strategically timed to coincide with the official launch of Ethiopia’s securities exchange by its capital market regulator towards the end of 2024. This positions the company to be the first international firm to access local currency debt through Ethiopia’s inaugural bond market.

The Ethiopian Stock Exchange has been conducting roadshows in Addis Ababa, Nairobi, and London since last year. Among the 48 foreign investors who subscribed to its capital raise include FSD Africa, The Nigerian Exchange Group (NGX) and Trade and Development Bank. 16 domestic banks, and 12 insurance companies also subscribed to capital raise. Read More…

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