Anwar Soussa still gets butterflies in his stomach when he recalls the call offering him the opportunity to head Safaricom Ethiopia.
For the 51-year-old Greek national and telco veteran, this was a chance to oversee the birth and development of the second telco in Ethiopia, Africa’s second biggest country by population and perhaps one of the most underserved in terms of telecommunication.
The first mobile phone services in South Africa were offered by Vodacom – a joint venture between Telkom, a South African telecommunications company and British multinational Vodafone in 1994. In contrast, Ethiotel, Ethiopia’s first mobile phone services provider, started operations in 2010.
Anwar had already earned his stripes in the world of telecommunication having previously been the Managing Director of Vodacom DRC and the Chief Executive Officer of Airtel in Uganda and Chad.
“Imagine someone calls you and says: Listen, we’re going to build a business. This business is going to be in Ethiopia. This business will be the size of Safaricom Kenya in about 10 years’ time. We’re going to be building thousands of sites a year. We’re going to be putting in the most modern network probably built ever, anywhere in place. You will have access to top class talent,” he recalled at the inaugural Safaricom Investor Day on February 15.
Shortly after he was in Addis Ababa, Ethiopia, the headquarters of this untapped market with a population of 119 million people, the second largest number in Africa.
More than half of these, 63 million, are adults and 13.5 million are between 14 and 18 years, meaning there will be more than two million new adults every year for the next five years.
“It’s not often that a leader gets the opportunity to do something they truly love. This project is truly a labour of love,” he told investors at the event at Carnivore Grounds.
The work to get Safaricom Ethiopia off the ground started with a team of 100 from Nairobi setting up temporary headquarters at a hotel in Addis Ababa and then working around the clock to set up the basic systems.
Safaricom Ethiopia has enjoyed speedy growth in the four months since its launch in October 2022. It crossed the one million subscribers mark just a month after the launch, with the number headed to three million in March 2023.
Safaricom Ethiopia is currently in 25 cities covering 10 per cent of the 110 million population. The business boasts of 847 network sites, 754 permanent employees and there are 5,000 places where one can buy a SIM card, and 28,000 places where one can buy airtime.
While most Mobile Network Operators are currently looking to upgrade or modernize their equipment, Safaricom Ethiopia’s network is fully 5G-enabled but will mostly operate on 4G because the company is yet to acquire the frequency.
“Everywhere, from the smallest town, will be getting 4G,” said Anwar.
Morten Bangsgaard, the Chief Technology Information Officer at Safaricom, described Safaricom Ethiopia as “every technology division’s dream” because every investment made in equipment is the latest, and there is no aged or aging infrastructure to replace.
“The technology, how you build your data centres, how you utilize your resources, so I would completely agree that this is the most modern network anywhere in the world right now,” said Morten.
Anwar explained a recent experience with the data in Addis Ababa.
“I was having dinner the other day in the middle of downtown and I did my fast speed test. And it clicked at 180 megabytes per second. It’s a fantastic network,” he said.
Even as Safaricom Ethiopia is keen to pursue excellence in the setup of voice and data infrastructure and push up the mobile penetration that stands at 57 per cent, the potential golden goose is in the provision of mobile financial services.
Only 35 per cent of the population are financially included in a country with a GDP of $110 million.
“Currently, the main thing Ethiopians are coming for is data as we have a fantastic data network. Looking into the future, M-PESA is going to be huge. M-PESA is going to be massive. In a country with 120 million people, the opportunity is unparalleled. So, marry a fantastic network with M-PESA, and there’s almost no limit,” says Anwar.
The Ethiopian Parliament enacted the National Payment System legislation In late December 2022 to open up the mobile financial services sector to foreign investment. Safaricom Ethiopia is in advanced discussions with the Ministry of Finance (MoF) to agree on the terms and conditions of investing in the financial sector.
Financial liberalisation is now an accepted government policy in the populous country with the hitherto closed market being opened.
For Anwar, this represents an opportunity: “Banks are now coming in. There’s a lot of Kenyan banks and South African banks that are interested and we’re meeting with many of them, including some American banks.”
“We’re doing some cutting-edge stuff regarding M-PESA. And we’re hoping to put this in the market very soon. We’re just making sure that we get the right structure and the right agreement with the government to move forward. The government is very intent on giving us the license,” explains Anwar.
Replication of the success of M-Pesa in Kenya is a fundamental pillar of Safaricom Ethiopia. The goal being to transform lives by making available digital payments and integrated solutions, e-commerce, remittances, and financial services.
In addition to enhancing financial inclusion, the increased network connectivity brought by Safaricom Ethiopia is expected to positively transform the lives of Ethiopians throughout the country, by using tech services in health, education, manufacturing, and agriculture.
However, there are significant challenges for a business to overcome in Ethiopia as captured by Anwar: “In terms of the country, it’s a vast country, it’s a complicated and interesting country. There are 100, plus local languages, but we operate in five different languages within our business on a day-to-day basis…GDP was going very strong until the conflict started in the north. Now that the conflict is running out, businesses are going back to normal with banks reopening and telco services also resuming. The exchange rate is under pressure, like in most countries now, so you have a divergence between the real exchange rates, and the ones in the parallel market. Inflation is high at 35% driven by the Ukraine crisis.”
For Anwar and his team, overcoming these challenges and building a business from scratch has been a steep learning curve.
“This is the first time Ethiopia has seen an investment of this size. We’ve imported roughly $400 million of equipment already, with another 200 million in the pipeline, to come through customs. To have people build this equipment, we’re building the entire ecosystem as we go. These are the learnings, and this is what gives us the confidence that this can be done, and that we can grow at scale and quickly,” he said.
The telecommunication market in Ethiopia is bound to witness increased growth and competition. This follows the Ethiopian government in February declaring it is open to offers for a 45% stake in Ethio Telecom while Ethiopian Communication Authority (ECA) is also expected to issue an Expression of Interest (EOI) for the 2nd private telecom entrants.
Even as he welcomes competition, Anwar is clear-eyed on the roadmap to market dominance for Safaricom in Ethiopia.
“There are four things that will define our success: the quality of our network, our people, our compliance of course, and our sales and distribution,” he said.
His projection for the coming decade for Safaricom Ethiopia is 2,000 – 3,000 employees, 10,000 network sites and an expansive M-Pesa network.
“Safaricom Ethiopia is going to be a very big business,” he concludes.
Safaricom Ethiopia is owned by an international consortium including Vodafone Group; Safaricom PLC; Vodacom Group; Sumitomo Corporation – one of the largest international trading and business investment companies; and British International Investment (BII) – the UK’s development finance institution and impact investor.
