Safaricom Telecommunications Ethiopia

Project description  

On May 31, 2021, the Ethiopian Communication Authority (“ECA”) granted Global Partnership for Ethiopia, a consortium of Safaricom Plc (Kenya); Vodacom International Holdings Proprietary Limited (South Africa); Vodafone International Operations Limited (United Kingdom); British International Investment Plc (United Kingdom); and Sumitomo Corporation (Japan) the second unified telecommunication service license following a competitive bid process. Global Partnership for Ethiopia created Safaricom Telecommunications Ethiopia (“STE”), private limited company and transferred the license to it. The License entitles STE to provide fixed and mobile telecommunication services in Ethiopia or internationally by the use and operation of an international gateway. STE is expecting to roll out launch and operate its 2G, 3G, 4G networks across the country with 5G in selected areas (the “Project”). The commercial operation started on October 6, 2022, and to date, STE network is currently available in 16 cities in Ethiopia. The Project cost to roll out the network in the coming 10 years is estimated at US$ 8 billion and is expected to be financed through a combination of equity and financial debt.  

The Proposed up to US$ 1,234.40 million MIGA Guarantee is to cover the Equity/Quasi-Equity investments by Safaricom Plc (Kenya); Vodacom International Holdings Proprietary Limited (South Africa); Vodafone International Operations Limited (United Kingdom); British International Investment Plc (United Kingdom) in STE. The MIGA guarantee is expected to have a tenor up to 10 years, providing coverage against the risks of War and Civil Disturbance, and Expropriation.  

The Project is aligned with MIGA’s strategic priorities of supporting investments into fragile and conflict-affected countries and countries eligible for concessional lending from the International Development Association (“IDA”).  

The Project will benefit from IDA Private Sector Window support through a shared first-loss and risk participation via MIGA reinsurance with an amount up to $300 million.   

Environmental Categorization  

This is a joint project with International Finance Corporation (IFC); in accordance with MIGA AIP, the MIGA disclosure is linked to IFC disclosure. Click here to view the Environmental and Social Review Summary prepared by the IFC for their proposed support to the project.  

Development Impact  

The development impact of this project is expected to be very significant through increased mobile penetration in the country, stemming from better technology deployment and pricing. Ethiopia has one of the lowest penetration rates in the world, with only 42% of Ethiopians with a mobile phone, and 16% with mobile broadband access (2020). Increased accessibility will bolster economic activities, with very significant impact on output and indirect and induced job creation. It will also help facilitate social protection services to the poor and vulnerable. Through clear and significant demonstration effects, the MIGA guarantee has the potential to stimulate more foreign direct investment to not only the telecoms sector but other sectors of the economy.