Safaricom Tightens Grip on Ethiopian Venture After Fresh Capital Injection

Safaricom has increased its ownership in Safaricom Ethiopia following a fresh capital injection. The move strengthens the telecom firm’s position as it pushes the business toward profitability.

The company raised its effective stake in Safaricom Ethiopia to 54.17% from 51.67% after contributing Sh19.64 billion through Vodafamily Ethiopia Holding Limited as part of a Sh21.3 billion cash call. At the same time, Vodacom increased its holding to 6.02% from 5.74%, lifting the two firms’ combined ownership to 60.19%.

However, Sumitomo Corporation, British International Investment (BII) and the International Finance Corporation (IFC) did not participate in the funding round, reducing their combined stake to 39.81% from 42.59%. Under the shareholders’ agreement, the three investors can restore their previous ownership levels by purchasing catch-up shares from Safaricom and Vodacom or by participating proportionately in a future capital raise that the two companies do not join.

Following the latest transaction, Sumitomo’s stake declined to 23.50% from 25.23%, BII’s to 9.5% from 10.11%, and IFC’s to 6.81% from 7.25%. If the minority shareholders do not restore their diluted stakes and the Ethiopian business becomes profitable, Safaricom and Vodacom will retain a larger share of future dividends.

Meanwhile, Safaricom expects its Ethiopian operation to break even by March 2027 after its annual loss narrowed by 35% to Sh21.2 billion from Sh36 billion. Service revenue reached Sh14 billion, driven by Sh9.5 billion from mobile data and Sh3 billion from voice services, while M-Pesa contributed Sh169.4 million.

The company also said total investment in the Ethiopian business has risen to Sh341.7 billion from Sh293.2 billion, supporting 13.6 million active customers and covering major investments, including a Sh109.8 billion telecommunications licence and a Sh19.3 billion M-Pesa licence.