Safaricom unlocks towers sharing deal with Ethiopian rival ahead of launch

Safaricom chairman Michael Joseph. FILE PHOTO | NMG

By BRIAN NGUGI
More by this Author

Safaricom  will access the giant network of Ethiopian State monopoly Ethio Telecom allowing the

telco to roll out its services across the vast Horn of Africa nation.

This follows an Ethiopian government-backed deal that paves the way for Safaricom to start commercial operations in the market of 110 million people, Safaricom Ethiopia officials now say.

“The deal is very important and critical for our commercial viability and launch. Hopefully (we will launch) soon but we don’t have a date yet,” Safaricom chairman Michael Joseph told the Business Daily.

Under the deal, whose financial terms are yet to be publicly revealed, Ethio Telecom will provide Safaricom Ethiopia with access to cell sites, masts and other active elements such as network roaming.

“We have agreed in principle on power-sharing, interconnection and tower sharing but it is not concluded as we are yet to sign a final agreement,” Safaricom Ethiopia public relations and communications manager, Tewedaj Eshetu, was quoted saying by the Ethiopian publication The Reporter.

Ethiopian Communications Authority (ECA) director-general Balcha Reba said the network sharing deal will be crucial for Safaricom as it will enable Safaricom customers to also call across Ethio telecom’s vast network.

“Safaricom can launch the telecom service as of now, using its infrastructure it already developed in major cities. However, the call works only in-between Safaricom customers. To interconnect with Ethio-telecom customers, the infrastructure sharing agreement is key,” Mr Reba said.

The Safaricom consortium, which also includes British development finance agency CDC Group and Japan’s Sumitomo Corporation, won the licence with a bid of $850 million (Sh97.9 billion) and aims to start commercial operations this year.

The consortium had been tipped to launch commercial services on April 9, 2022.

The Ethiopian telecoms regulator is considering extending the launch day by “one or two months”, local reports said.

“This is because we understand the challenges. But extending the launch date will affect Safaricom’s time schedule to meet next deadlines,” Mr Balcha said.

Network sharing is a strategic solution for new entrants into a market already dominated by an incumbent operator or in mature developed markets.

Site and mast sharing and network roaming are the most common forms of infrastructure deals due to their relative technical and commercial simplicity.

Local reports said under the agreement Safaricom will use both the US dollar and Ethiopian local currency the Birr as payment currencies for infrastructure access.

“The ratio can be 70/30 for certain infrastructure leases, while it can be 40/60 for others. The main objective is to make certain a return on investment from the infrastructure built with public money,” Mr Balcha said.

Safaricom is also setting up its infrastructure and has unveiled its first China-assembled data centre in Addis Ababa.

Built for $100 million, the facility was deployed less than a year after the consortium led by Safaricom, South Africa's Vodacom and Japan's Sumitomo was awarded a mobile operating licence.

bnjoroge@ke.nationmedia.com