Safaricom surges after securing Ethiopia mobile financial services licence

FILE PHOTO: An employee fixes a branding sticker on the Safaricom Ethiopia retail shop in Addis Ababa, Ethiopia, July 29, 2022. REUTERS/Tiksa Negeri

NAIROBI (Reuters) - Shares of Kenyan telecoms operator Safaricom surged more than 9% on Friday after it secured a mobile financial services licence in Ethiopia, market participants said.

Ethiopia's Finance Minister Ahmed Shide said on Thursday his country had given Safaricom the licence in one of Africa's largest telecoms markets as the company formally switched on the first privately-operated network in the country.

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

It would have taken Safaricom, whose partners include South Africa's Vodacom and Britain's Vodafone, five years to break even without a mobile money licence, but now it could take three years, Kimathi said.

Safaricom's main competitor, the state-run Ethio Telecom, launched a mobile phone-based financial service called Telebirr last year, to boost growth by offering cashless transactions.

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

M-Pesa was among the world's first mobile transfer services in 2007. It has since evolved to a fully fledged financial service offering payments services, savings and credit in several African nations.

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

Ethiopia's telecoms industry is considered the big prize in Prime Minister Abiy Ahmed's push to liberalise the economy after he took over in 2018, thanks to a large population of 110 million.

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

(Reporting by Duncan Miriri; editing by Jason Neely, James Macharia Chege and Louise Heavens)

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