Safaricom has made known its expectations for a drop in the bid price for the Ethiopian market licence. This follows recent news that only locally owned non-financial institutions will be allowed to offer mobile money services.
It has been knowing for a while now about Safaricom’s heavy interest in entering the market of 108 million people with about 50 million phone subscribers. So, it would have been reasonable to go for the higher price had the Ethiopian government allowed it to bring in its mobile money platform M-PESA as well.
A reportedly disclosed transcript covering events to end of July reveals that the telco sees a license without mobile money hurting profitability and lengthening the period of recouping the investment.
“A license that doesn’t include a mobile money license will significantly reduce the level of profitability and therefore, in essence, our bid price for the licence but also our profitability and payback period,” chief executive Peter Ndegwa says in the transcript call.
It is still now known how much Safaricom is willing to bid or how much the growth the investment will be expected to generate. This, according to Safaricom, is competitive and sensitive information.
Safaricom had already made its application for a licence months ago after the Ethiopian Communications Authority disclosed its interest to issue two new full-service telecommunication licenses.
However, there were several other African network operators who expressed their interests and applied for the license as well. So, it is up to the two lucky companies to get the much-coveted licences to operate in one of the biggest markets in the continent.
Those firms include Liquid Telecom, Etisalat, Snail Mobile, Axian, MTN, Orange, Saudi Telecom Company and Telkom (South Africa).