Safaricom Surges by 8% on Ethiopia Mobile Financial Services Licence

Safaricom Surges by 8% on Ethiopia Mobile Financial Services Licence (News Central TV)

Following the company’s receipt of a mobile financial services licence in Ethiopia on Friday, market participants said that shares of Kenyan telecom operator Safaricom SCOM.NR increased by more than 8%.

The first privately run network in the nation was officially launched on Thursday, according to Ethiopia’s Finance Minister Ahmed Shide, who also announced that his nation has granted Safaricom a license in one of the major telecoms markets in Africa.

“It (licence) will bring the break-even period forward by approximately two years,” said Lisa Kimathi, an investment analyst at Standard Investment Bank.

Without a mobile money license, it would have taken Safaricom, whose partners include South Africa’s Vodacom VODJ.J and Britain’s Vodafone VOD.L, five years to break even. Now, Kimathi added, it might only take three years.

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A mobile phone-based financial service called Telebirr was introduced last year by Safaricom’s biggest rival, the government-run Ethio Telecom, to spur expansion by enabling cashless transactions.

Millions of users now use Telebirr, but according to Kimathi, Safaricom’s M-Pesa financial services platform could overtake it.

In 2007, M-Pesa was one of the pioneering mobile transfer providers in the globe. Since then, it has developed into a full-fledged financial service that provides credit, savings, and payments services in various African countries.

Executives from Safaricom stated that they also saw tremendous prospects to offer internet connectivity in Ethiopia.

With a population of 110 million, Ethiopia’s telecoms sector is seen as the main prize in Prime Minister Abiy Ahmed’s drive to liberalize the economy since he took office in 2018.

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However, a war in Tigray‘s northern province, which has killed thousands of people and displaced millions more, has hurt Abiy’s efforts to entice investment.

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