Safaricom Ethiopia will be Bigger than Safaricom Kenya

Anwar Soussa CEO, Safaricom Ethiopia

Anwar Soussa is a senior corporate executive who now serves as the founding CEO of Safaricom Telecommunications Ethiopia, a subsidiary of the Nairobi-based telecommunications and financial multinational, Safaricom.

Ethiopia announced the opening of the telecom sector in 2018. This materialized with the establishment of the Ethiopian Communications Authority (ECA) in the same year and subsequent licensing of the Global Partnership for Ethiopia (GPE) in 2021, which has now become Safaricom Ethiopia. This ends the 128 years of monopoly in Africa’s second-most populous country.

The company he leads is a consortium of multinational operators in which Kenya’s Safaricom is the largest with a 55.7Pct share, followed by Japan’s century-old Sumitomo Corporation with 27.2Pct, the CDC Group—currently named British International Investment—owning 10.9Pct, and Vodacom—the South African telecom company—retaining a 6.2Pct stake. GPE paid a USD850 million licensing fee.

Anwar holds an MSc in Business Administration earned from Concordia University, in Montreal. He has spent a significant portion of his career in senior management positions of telecommunications firms on the African continent, alongside stints in Cyprus and Papua New Guinea. Hired as Managing Director of Vodacom DRC and Chairperson of Vodacash in 2017, he is credited with turning the unit into the largest Vodacom operation outside of South Africa—exceeding USD500 million in gross revenue for the first time in 2020.

Prior to joining Vodacom, he served as CEO of Airtel Uganda and Chad, subsidiaries of the Indian multinational telecom operator based in New Delhi. He has also occupied various other senior leadership roles at MTN, a South African multinational operating in many African and Asian countries, as well as Digicel, a Jamaica-based mobile phone network and home entertainment provider operating in 33 markets.

Anwar’s cross-functional experience and special focus on emerging markets bode well for the company, Ethiopia’s telecom sector, and national development at large as such is the power of telecommunications.

In this interview, he conversed with EBR’s Addisu Deresse about Safaricom’s entrance into Ethiopia’s telecom sphere, the challenges of doing business in the country, and the expected shifting dynamics within the economy following the commencement of services by his company.

What have you been up to as Safaricom Ethiopia since the license was assigned?
Since receiving the license at the end of June 2021, we have been trying to unlock the country in a way in which we could understand it. It’s not a straightforward process here in Ethiopia. I am not talking about government-related procedures, but rather, the investment and size of the telecommunications company. It’s also customs, land acquisition, and how to interconnect your towers. There are additional complexities that were not foreseen when you enter the country—more complicated than what you think. So, we’ve been trying to understand how things work. We have also been busy hiring people and ordering massive amounts of equipment. Further, we’ve found our building where we can set up our office as well as a site to establish our first data centers. There’s a lot that’s been happening since we started in June.

Can we say the launching of the operation is a bit delayed?
We were required to commence commercial operations on the 9th of April 2022, along with obligations of ensuring 25Pct population coverage by April 2023. Requirements continue to grow throughout the 15 years of the license’s duration.

Since the granting of our license, we and the country have been subject to unforeseen and unprecedented circumstances. We regularly assess and adapt our programs accordingly towards the commercial launch and we have held regular briefings on the status of our preparations and requests for support from the Ethiopian Communications Authority (ECA).

Our objective is to launch with quality services and ensure the building of strong foundations for telecommunications liberalization and sector development to enable the provision of world-class services for Ethiopians and contribute to long-term Digital Ethiopia objectives.

A key part of this, alongside self-building our network—are wholesale agreements with Ethio Telecom. We recently concluded multi-round negotiations with them—convened by ECA—on interconnection, transmission capacity, and tower and power sharing. As a matter of priority, we are now working to conclude the agreements.

Are you eying for the same success as what you had in the Democratic Republic of the Congo (DRC)?
USD500 million?! Oh, I think much more. We have been busy unlocking the country. The potential for telecommunications here is massive. The idea is that we are going to be somewhere a little bit bigger than Safaricom Kenya but a little bit smaller than MTN Nigeria or Vodacom South Africa. It’s expected to be a very large organization.

What factors do you focus on to successfully manage a telecom company?
There are internal and the external issues to pay attention to. Internally, you need to have a good, solid management team with very good governance structures, especially with procurement. You want to make sure that the company is healthy and hasn’t got any bad habits, or at least that it does not take on very bad habits from the beginning because those habits can become self-serving within the company’s infrastructure. When people start caring more about themselves or their own businesses within your business, you have a problem.

The external factor to be looked at is the issue of regulations, which have massive impact. There are countries that have heavy regulations, and some with light. With light-touch regulation, you could grow extremely easily. Heavy regulations, on the other hand, force management to spend the majority of their time worrying and managing the rules of the country, rather than the business. It is very difficult to manage telecom companies in these countries.

The other thing is the ecosystems. A company needs good, solid banks to support it. You also need very solid insurance companies because you have billions of US dollars invested. Where do you get the coverage for your equipment? For example, in the DRC, we experienced a fire that damaged one of our switches which was worth USD50 million.

We also look at the factor of distributors and call centers. So, you might be a strong entity on your own but it is the ecosystem that pulls you up. Otherwise, you have to build the ecosystem which takes a much, much longer time.

Do you consider digital literacy as another factor?
We haven’t gone into that as we haven’t started operating. But I can tell of you this in three months’ time.

What other challenges are felt in terms of operations and regulations?
The import process is very complicated. We’re bringing in roughly USD300 million of equipment a year. That’s a massive amount of equipment. Now, the government has been extremely forthcoming, helpful, and flexible in terms of how they’re dealing with us, because this is an extremely important national project; they’ve made it much easier for us and have helped us a lot. But the implementation is a challenge. USD300 million of equipment is supposed to come in this year and we have another USD300 million that is going to start getting manufactured. Pulling that much equipment through our system is not easy. So, from a complexity perspective, that needs to be managed.

Diplomatic relations between the West and Ethiopia are not in the best position. Is this a challenge for a foreign company like Safaricom Ethiopia with its ownership structure that includes Western companies and institutions?
No, not at all. Our companies—whether Vodafone, Vodacom, or Safaricom—are companies of investors with long-horizon investment outlooks. We don’t usually worry about short-term challenges like civil unrest and others. We’re here for the 20 to 30 years to come and expect Ethiopia to progress dramatically in the coming years. Honestly, we feel very privileged to be here at this time. We know there are shakes, we know there are moves, but at the same time, it’s like it’s normal. It’s a country that’s being rebuilt and modernized at this point. It’s got massive history which is incredible, deep, and rich. But now, it’s looking to progress into a more modern, technological world and that’s something that we’re very happy to be part of. We’re not worried. The size of the investment and amount of equipment we’re buying demonstrates we’re not going anywhere.

Do you think the idea of sharing infrastructure with your competitor will work out?
These are very important agreements that are part of the long-term foundations for the companies to work together at the wholesale- and infrastructure-level for the country. [These deals] are being negotiated in accordance with the Communications Proclamation and the Regulatory Framework overseen by ECA.
It should be noted that it is common for such agreements to take around 6 to 12 months and often necessitate regulatory intervention, in other countries around the world.

What are the dynamics of having just one more competitor as government recently discontinued plans of a third license?
I do not think that the current dynamics of just two competitors will last for long. As soon as we launch—and especially if we have a good launch using Ethio Telecom’s infrastructure and with mobile financial services—other global operators will develop a fear of missing out and will start engaging with the government. The critical element however is financial sector reform and the easing of the foreign exchange crisis. Any new global business who invests shareholder money in Ethiopia will need assurances that it will be able to exchange local currency in order to make future capital investments as well as repatriate profits at some point in time. Today, while the market is very attractive, currency convertibility is potentially the biggest issue that sits on an investor’s mind, especially when they are considering investing large amounts of capital in Ethiopia.

How will the expansion of the telecom sector impact the Ethiopian economy?
The introduction of a big company, especially one of the quality of Safaricom, will bring in vast investment. We will hire some of the best people in the country and create systems allowing them to flourish. Automatically, this will change the business culture because that big player has to quickly change the ecosystem. It has to bring in suppliers, and partners, as well as deal with competitors. So, everything starts improving, whether it’s the marketing skills or finance knowhow. Everything will start changing on qualitative level.

Underneath that, the enabling of technology also starts changing. For example, we’re looking for an international partner for call centers to come and help us create a world-class customer experience. One of them told us how they have corporate customers lined up in the United States. But the connectivity in Ethiopia doesn’t allow them to guarantee the support and quality of service needed to serve these customers. So, there’s a massive amount of potential for us to start growing the entire economy by serving customers abroad, by creating advanced local companies called unicorns. It’s possible. Almost every other big economy in Africa has been able to do, and so can Ethiopia.

Digitization is going to change everything but it hinges on having good networks, both with fiber and wireless. That’s what we’re here for and this is really going to be a game-changer that I think a country like Ethiopia is ready for and is expecting. You have educated people, you have a forward-looking government, and you have big aspirations as a country. So I think everything is coming together.

Do you think your entrance will facilitate the practice of online skills exports?
That’s very possible as well. I think skills exports will form a significant amount of economic activity because we are experienced in the market. The quality of Ethiopian talent is very high and would lend itself very well to that type of business.

Some critics argue a nation is less secure for having foreign telecom companies. What’s your take on this?
No, I don’t think so. The internet, by definition, is open. It would not make a big difference if you’re connected to Ethio telecom or Vodacom or Safaricom. You’re still exposed and you have to learn how to protect yourself within the open space called the internet.

In terms of the customer data, the better the company, the better the protection. From a very honest perspective, security costs a lot of money and thus you need to have large companies to make huge investments to keep your data safe. The nationality of the company doesn’t matter; it just controls systems including up-to-date software and hardware, very skilled technicians, and then the techniques around. This is extremely difficult and those skill sets are very, very rare.

It has nothing to do with privatization. You’ve seen hacks everywhere in the world and we know what we’re going to address.

What should the public expect in terms of quality and prices from Safaricom Ethiopia?
In terms of quality, I think we should be very optimistic. For example, let’s say you buy the 2022 model car. That car is significantly better than the same model you bought 20 years prior. So, we’re coming in now and putting in a state-of-the-art model network of 2020 to 2023—the most advanced ever in Africa, but also probably one of the most advanced in the world. So, from a quality perspective, it’s going to be very acceptable and I think people should expect that they’re going to see a significant improvement over what’s available. Of course, the incumbent will have to modernize enough to improve, and they will; we don’t expect that they won’t. That’s why competition is there; it forces the other to move as well.

In terms of network rollouts, it’s going to take us three to five years to catch up with Ethio Telecom because it’s a huge country. Covering the entire country from the first day is not going to happen. We request that public be patient with us as we roll up from city to city to countryside.

Ethio Telecom has already made some extremely strong price moves over the past months and I don’t see prices dropping beyond that because at the end of the day, there are salaries to pay and networks to build. So, we’re going to find that things will balance-out for the next little while.

5G is already a platform for competition worldwide. What should we expect in that regard?
Our network is 5G enabled; if we choose to switch, it will be able to do so. We’re using Nokia’s network which only requires a small investment to turn on 5G. Also, in Huawei’s network, 5G is enabled. But I don’t think people are ready to use 5G at this point. It is very useful in advanced user cases, like remote surgery administration and such things which require very low latency in terms of signal.

I think 5G will make a difference, but it will be inferior stuff. We may not be interested in it from the perspective of fewer available handsets and inadequate power supply.

As your competitor is state-owned, do you expect to face an unfair playing field?
I don’t foresee it as a challenge. It will be in the beginning because the government will want to protect something that had been generating so much revenue for it. We understand it might find it difficult to lose that connection, so to say. However, we also understand that the government is also looking forward to taking the country to the next level. They want this country to become an economic powerhouse and I think they will be fully supportive towards us providing services and infrastructure that will allow that progress to happen.

There are two sides to this. Yes, there might be a desire to protect a local company that has been bringing few advantages for the government. But there is also another company that is coming in with foreign experience, new technology, and international partners, etc. So, there’s a bit of a balance in terms of what the competition will bring.

What about nationalist opinion and the public’s sense of ownership over Ethio Telecom? Do you expect any challenge to arise from that?
No. At the end of the day, it is price and quality that matters.

EBR 10th Year • Apr 2022 • No. 106

One comment

  • Nuguse

    July 5, 2022 at 1:44 am

    Do better than ethio telecom. As we seen your company is good starting. But how can service delivered by this situation? Your success is strength of building manpower capacity. I am doing telecom industry more than 7 yrs and applying your more than 10 vacancies still i am not selected. Its not clear your qualification it needs some investigation around HR your company.
    Thank you


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