Safaricom’s โฃEthiopian Venture fuels Market growth, But Faces Mounting Financial Strain, โWorld Bank Reportโ Reveals
ADDIS ABABA, ETHIOPIA – Safaricom’s โentry into the Ethiopian telecommunications market has spurred significant economic growthโ and job creation, but the company continues โto operate at โa loss due to incomplete regulatory reforms and a โขchallenging economic climate, accordingโข to a new report by the World โฃBank. The findings highlight a complex picture of successfulโค market liberalization hampered by structural โconstraints.
The World Bank estimates โthat telecom liberalization, largely driven byโข Safaricom’s arrival, hasโฃ addedโ approximatelyโข US$3.1 billion (KSh 400.6 billion) to ethiopia’s GDP – representing โ0.7% of Gross National Income โperโค capitaโค – and supported around โ900,000 jobs. โTheโข expansion has demonstrably “transformed Ethiopia‘s digital landscape,” introducing mobile money via M-Pesa, boostingโ connectivity, and raising standards for โcorporate governance and openness. โIt has also โฃfostered innovation in โfintech,digital trade,and mobile โpublic โขservices.
however, the reportโฃ details significant financial difficultiesโ for Safaricom in Ethiopia. Current revenue levels are insufficient to cover annual license amortization costs of US$66.7 million (KSh 8.6 billion) orโค ongoing network operationsโฃ and maintenance. The company also incurs costs of over US$3 million (KSh 388 million) annually for fibre leasing from its primary competitor, ethio โtelecom, due to โฃthe delayed licensing of autonomous Tower โCompaniesโข and โขInfrastructure Companies โค(InfraCos).
This reliance on Ethio telecom forโ wholesale network access,while competing on โขretail prices,”severely limits profitability,” the report states. Further exacerbating theโข situation is the sharp โdepreciation ofโ the Ethiopian birr, which fell from 55 to 138 per U.S. dollar between 2024 and 2025. This โcurrency โขdevaluation slashed โdollar-equivalent revenues and reduced the averageโ revenue per user (ARPU) from US$1.66 (KSh 214.6) to US$1.19โข (KSh 153.8). Effective data prices also dropped from โข38โค centsโ (KSh 49.1) to 21 โคcents โ(KSh 27.1) per โgigabyte.
In contrast, Ethio Telecom maintains lower โฃtariffs โ- around 16 cents (KSh 20.7) per gigabyte – by cross-subsidizing data โservices with profits fromโค voice โcalls, a strategy unavailable to Safaricom.
The world Bankโ warns that Safaricom’s โEthiopianโค business โremains “structurally constrained” by the absence of licensed TowerCos, InfraCos,โ and โMobile Virtual Networkโฃ Operators (MVNOs), โas well as โa lack of a โcost-based interconnectionโข framework.โ This creates an unevenโ playingโค field thatโข advantages the state-owned Ethio Telecom.
The report concludes that without “urgent regulatory equalisation and reforms to allow infrastructureโข sharing and fair pricing,” Safaricom’sโ Ethiopian venture couldโ remain loss-making indefinitely. Despite โฃthe early โfinancial โขchallenges, theโ bank emphasizes that Safaricom remains “a critical driver ofโข market reform,” offering valuable lessonsโ for investors and regulators on balancing liberalization with long-termโข sustainability. The experience,the report cautions,could serve as a “cautionary โtale” demonstrating that liberalization requires “structural support” to avoid leaving investorsโค with sustained losses.
