Safaricom soars after securing mobile financial services license in Ethiopia

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NAIROBI, Oct 7 (Reuters) – Shares in Kenyan telecoms operator Safaricom (SCOM.NR) jumped more than 9% on Friday after securing a mobile financial services license in Ethiopia, market participants said.

Ethiopian Finance Minister Ahmed Shide said on Thursday that his country had awarded Safaricom the license in one of Africa’s biggest telecom markets as the company officially activated the country’s first private network. Read more

“It (the license) will bring the payback period forward by about two years,” said Lisa Kimathi, investment analyst at Standard Investment Bank.

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It would have taken five years for Safaricom, whose partners include South African Vodacom (VODJ.J) and Britain’s Vodafone (VOD.L), to break even without a mobile money license, but now it could take three years, Kimathi said.

Safaricom’s main competitor, state-owned Ethio Telecom, launched a mobile-based financial service called Telebirr last year to spur growth by offering cashless transactions.

Telebirr is now used by millions of subscribers, but Kimathi said Safaricom’s M-Pesa financial services platform could take the lead.

M-Pesa was one of the world’s first mobile transfer services in 2007. It has since evolved into a full-fledged financial service offering payment, savings and credit services in several African countries.

Safaricom executives said they also see huge opportunities in Ethiopia to provide internet access.

Ethiopia’s telecommunications industry is seen as the grand prize of Prime Minister Abiy Ahmed’s efforts to liberalize the economy after taking office in 2018, thanks to a population of 110 million.

Abiy’s efforts to attract investment have, however, been undermined by a war in the northern Tigray region, which has killed thousands and displaced millions.

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Reporting by Duncan Miriri; edited by Jason Neely, James Macharia Chege and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

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