Safaricom raises Ethiopia stake to 54.1% after a $165m investment, strengthening its position in Africa’s largest telecom market ahead of a 2027 breakeven target.
Three years after entering one of Africa’s last closed telecom markets, Safaricom PLC is increasing investment in a business that is still making losses.
The Nairobi-listed operator increased its ownership in Safaricom Ethiopia to 54.1 percent in the year ended March 2026 after participating aggressively in a fresh funding round alongside Vodacom Group. The move diluted several heavyweight backers, including Sumitomo Corporation, British International Investment and the International Finance Corporation.
On paper, the transaction looks straightforward: Safaricom injected another Sh21.3 billion ($165 million), pushing its cumulative Ethiopia exposure to Sh158 billion ($1.22 billion). Yet beneath those figures sits a far larger strategic contest over who ultimately controls East Africa’s digital future.
Total shareholder funding in the Ethiopian venture has now reached Sh341.7 billion ($2.64 billion). That level of spending is rare in African telecom expansion projects. Even by emerging-market telecom standards, the capital burn is extraordinary.
But so is the prize.
Ethiopia, with a population exceeding 130 million people, represents Africa’s second-most populous nation after Nigeria and one of the final large-scale mobile-data growth frontiers left globally. For decades, the market was dominated by state operator Ethio Telecom. Liberalization created a rare opening for foreign telecom firms.
Safaricom executives increasingly speak about Ethiopia less as a subsidiary and more as a generational strategic asset — one capable of reshaping the company’s long-term earnings architecture beyond Kenya’s maturing telecom market.
That logic helps explain why the group continues absorbing massive upfront losses while many global telecom operators are retreating from frontier-market risk exposure.
The Ethiopian unit still posted a Sh21.2 billion annual loss, though the deficit narrowed sharply from Sh36 billion a year earlier. For investors, the reduction matters less as an accounting detail and more as evidence that the venture may finally be moving from infrastructure-heavy deployment into monetization mode.
Safaricom chairman Adil Khawaja signaled precisely that transition.
“Ethiopia is gradually transitioning from roll-out to scale,” he said, framing the market as a long-duration expansion rather than a near-term profitability exercise.
That distinction is critical.
Telecom expansion in frontier markets requires heavy spending in the early years. Operators spend heavily on towers, spectrum, fiber and customer growth long before revenues stabilize. Ethiopia’s case has been even more complex because of foreign exchange shortages, political instability, inflationary pressure and infrastructure bottlenecks that have complicated deployment economics.
The company disclosed that part of the latest funding round was directed toward settling obligations tied to infrastructure suppliers and equipment vendors. Chief finance officer Dilip Pal said the Ethiopian subsidiary cut deferred vendor liabilities by $121 million during the period while also expanding an existing financing facility from $100 million to $134 million.
That financing evolution reveals another important shift: Safaricom is slowly engineering a transition away from pure equity dependence toward blended funding structures using local debt and supplier financing.
In effect, the company is trying to convert Ethiopia from a shareholder-funded expansion story into a partially self-financing operating business before investor patience weakens.
The urgency is understandable.
Even as subscriber growth accelerates, Ethiopia remains an unusually difficult operating environment for multinational investors. Chronic dollar shortages complicate repatriation planning. Inflation continues pressuring household purchasing power. Political tensions still linger after years of internal conflict. Meanwhile, infrastructure deployment costs remain elevated relative to consumer spending capacity.
Yet early commercial signals are beginning to validate Safaricom’s thesis.
Monthly active customers climbed to 10.75 million during the financial year, driven partly by tariff adjustments introduced in December 2025 and improving macroeconomic conditions. Revenue reached Sh14 billion, with mobile data accounting for Sh9.5 billion — nearly 68 percent of total turnover.
That revenue mix is revealing.
Unlike older African telecom markets that relied on voice calls, Ethiopia is quickly becoming a data-driven market. Consumers are moving quickly to smartphone internet usage. That shift could support future growth in streaming, fintech, e-commerce and digital services.
Voice revenue stood at Sh3 billion, underscoring how secondary traditional calling services are becoming inside the company’s broader commercial model.
The weakest segment remains mobile money.
Despite M-Pesa enjoying near-mythical status in Kenya, Ethiopia contributed only Sh169.4 million in M-Pesa revenue during the year — a negligible figure relative to the scale of investment. The muted performance reflects regulatory constraints, financial-system conservatism and the early-stage nature of Ethiopia’s digital-payments ecosystem.
Still, executives remain convinced mobile financial services could eventually become the operation’s most valuable earnings engine.
That belief mirrors what happened in Kenya, where M-Pesa evolved from a payments utility into the central nervous system of the economy, supporting everything from merchant transactions to lending and wealth products.
The Bigger Strategic Battle Behind the Funding Round
For global investors, Safaricom’s Ethiopia strategy now looks more like a long-term infrastructure project than a normal telecom expansion.
The company is effectively betting that digital connectivity in East Africa will become as systemically important as transport corridors, ports or energy grids over the next decade.
That helps explain why Safaricom — despite pressure on margins and rising capital intensity — continues increasing exposure while several co-investors passively dilute.
Vodacom’s ownership edged higher to 6.02 percent from 5.74 percent. Meanwhile, Sumitomo’s holding declined to 23.5 percent, British International Investment fell to 9.5 percent and IFC slipped to 6.81 percent.
The dilution dynamics quietly reveal who remains willing to absorb near-term risk in exchange for long-duration strategic control.
Safaricom clearly wants that control.
The company still expects the unit to break even by March 2027. Investors see that target as a key test of whether the Ethiopia venture will succeed.
For now, the market is showing cautious optimism.
Losses are narrowing. Data usage is accelerating. Customer growth remains strong. Vendor obligations are shrinking. Financing structures are improving.
Yet the deeper reality is that Safaricom is no longer merely expanding into Ethiopia.
It is attempting to build the digital rails of a future East African economic super-region — before global capital fully prices in its significance.