Safaricom Faces a Hard Truth in Ethiopia: Growth Is Easy, Profit Isn’t
The optimism around Safaricom’s Ethiopia expansion now runs headfirst into the limits of what low tariffs and a falling currency can support
Safaricom’s bet on Ethiopia has always been a long play. Two years after it entered the market, the company is now leaning on a possible tariff review to move closer to profitability. Revenues have been growing, but the numbers remain under strain from a fast-weakening birr and rates too low to sustain dollar-denominated investments.
The telco’s half-year results to September 2025 show a smaller loss — Sh15.2 billion, down from Sh19.4 billion a year earlier — and management says the goal for profits by March 2027 still stands. Yet the path to that target depends on how soon the Ethiopian market can stomach higher service charges.
Counting the Cost of Undervalued Services
Safaricom’s chief finance officer, Dilip Pal, called the situation untenable: the company is selling data and voice “below cost.” The birr’s slide — from 57 to the dollar in mid-2024 to 146 — has wiped out much of the return the operator expected. The math no longer works unless prices do.
A World Bank-backed report to the Ethiopian Communications Authority made a similar conclusion: the country’s telecom tariffs are too low to attract or retain serious investment. Average revenue per user sits at about one dollar a month — among the lowest on the continent. With that base, operators can’t fund network growth, and the nation risks stalling its digital gains.
Growth Under Pressure
Still, Safaricom’s numbers tell a story of momentum beneath the surface. Total revenue in the six-month period reached Sh6.18 billion, driven mainly by internet packages that brought in Sh4.1 billion. Voice earned Sh1.3 billion, messaging Sh74 million, and M-Pesa just Sh8.7 million — a sign of how hard it remains to shift a cash-driven economy toward mobile money.
Data use, however, has become the strong anchor. Ethiopian subscribers buy an average of 6.7 GB per month — about 1.4 times what Kenyan users consume — while talking less on average. That trend fits Safaricom’s infrastructure focus, where data delivery has been easier to scale than voice or payments.
The Long View
Safaricom Ethiopia now counts more than 11 million active customers in a 90-day cycle, an 84 percent increase year-on-year. The company says network integration is improving after recent cuts in mobile termination rates that make off-network calls cheaper, slowly building the kind of community effect it depends on in Kenya.
For now, the strategy rests on regulatory patience and macro-economic hope. If tariffs rise and the birr stabilises, Safaricom’s dollar book could finally make sense. If not, even strong user growth might not bridge the gap between volume and value.
Go to TECHTRENDSKE.co.ke for more tech and business news from the African continent.
Follow us on WhatsApp, Telegram, Twitter, and Facebook, or subscribe to our weekly newsletter to ensure you don’t miss out on any future updates. Send tips to editorial@techtrendsmedia.co.ke
