Safaricom will gain access to the giant network of Ethiopian state monopoly Ethio Telecom, allowing the telecom operator to roll out its services in the vast Horn of Africa country.
This follows an Ethiopian government-backed deal that paves the way for Safaricom to start business operations in the market of 110 million people, Safaricom Ethiopia officials now say.
“The agreement is very important and critical to our commercial viability and launch. Hopefully (we will launch) soon, but we don’t have a date yet,” said Safaricom President Michael Joseph. business daily.
Under the agreement, the financial terms of which have yet to be publicly disclosed, Ethio Telecom will provide Safaricom Ethiopia with access to cell sites, cell towers and other active elements such as network roaming. .
“We have reached an agreement in principle on power sharing, interconnection and tower sharing, but it is not yet done because we have not signed a final agreement yet,” said Tewedaj Eshetu. , head of public relations and communications at Safaricom Ethiopia, quoted by the Ethiopian publication. The journalist.
Ethiopian Communications Authority (ECA) Director General Balcha Reba said the network sharing deal will be crucial for Safaricom as it will allow Safaricom customers to also call on Ethio Telecom’s extensive network. .
“Safaricom can launch telecom service now, using its already developed infrastructure in major cities. However, the call only works between Safaricom customers. To interconnect with Ethio-telecom customers, the infrastructure sharing agreement is essential,” Mr. Reba said.
The Safaricom consortium, which also includes UK development finance agency CDC Group and Japan’s Sumitomo Corporation, won the license with an $850m (Sh97.9bn) bid and aims to start operations business this year.
The consortium had been tipped to launch commercial services on April 9, 2022.
Ethiopia’s telecommunications regulator is considering extending the launch date by “one or two months”, according to local reports.
“It’s because we understand the challenges. But extending the launch date will affect Safaricom’s schedule to meet upcoming deadlines,” Balcha said.
Network sharing is a strategic solution for new entrants in a market already dominated by an incumbent or in mature developed markets.
Site and mast sharing and network roaming are the most common forms of infrastructure agreements due to their relative technical and commercial simplicity.
According to local reports, as part of the deal, Safaricom will use both the US dollar and Ethiopia’s local currency, the Birr, as payment currencies for infrastructure access.
“The ratio can be 70/30 for some infrastructure leases, while it can be 40/60 for others. The main objective is to ensure a return on investment from the infrastructure built with public money,” said Mr. Balcha.
Safaricom is also setting up its infrastructure and unveiled its first China-assembled data center in Addis Ababa.
Built for $100 million, the facility was rolled out less than a year after the consortium led by Safaricom, South Africa’s Vodacom and Japan’s Sumitomo was granted a mobile operating license.