M-PESA, DATA AT THE HEART OF SAFARICOM

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(Photo: Anteneh Aklilu)

In the wake of a string of successful pilots across 10 cities in Ethiopia, Safaricom Ethiopia went national following an eventful launch on the sixth of October, 2022 at the heart of Ethiopia’s capital, Addis Ababa.
In light of Safaricom Ethiopia becoming the first private operator in one of Africa’s largest telecoms markets; Capital’s Metasebia Teshome sat down with the firm’s Managing Director, Anwar Soussa, for an exclusive interview on insights of the firm as it hits the ground running. Excerpts;

 

Capital: Tell us about yourself? How long have you been working with the Safaricom group? Describe your come up to this position?

Anwar Soussa: Career wise, I have spent more than 20 years in the management of telecommunication networks in the African continent, with stints in the Middle East and Oceania. Prior to my appointment as CEO of Safaricom Ethiopia, from September 2017 until June 2021, I served as the CEO of Vodacom Congo DRC SA, based in Kinshasa. With regards to joining the Safaricom group in Ethiopia, I started the process of joining the group about three to four months before we received the license.
I have found Ethiopia to be amazing; the people in themselves are extremely friendly, gentle and beautiful. The culture in the country is also magnificent, and I look forward to enhancing Safaricom Ethiopia’s presence in the days, months and years to come.

Capital: It has been a month since Safaricom started its pilot service in 10 cities. How would you describe the launch process and lessons learnt thereof?

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Anwar Soussa: The launch process on its own was a success. At the back end, with regards to the practical launch elements of starting to run our services, extensive preparations have been done in the areas of building the infrastructure, imports and staff hiring.
Being a new entrant to a country, I would say it has been a learning curve; since we have learned a lot and in any nature of business the more you learn and adapt accordingly, the more efficient you become. Experience is pivotal and currently on our end, we feel that we are getting to know the country better, than when we first came in.

Capital: There was notably a 5 month delay to the original launch date. What were the major reasons that led to this?

Anwar Soussa: As per the initial plan, we were going to co-locate with Ethio-telecom which simply means that we were to share facilities such as the telecom towers. The negotiations for this took longer than expected. We had presumed that the deals would have been finalized by December last year but sadly that stretched to June.
Of course this resulted to a lag in our schedule. We had also to build our own towers and assembling of the right team and equipment to put up the infrastructure took time. The price hikes and China being on lockdown did not make the process any easier. Nonetheless, despite the four to five months delay, we have set up shop, and have begun our operations.

Capital: What’s your assessment of the public’s reaction to your services?

Anwar Soussa: We have had a resoundingly great reception from the public. Those that have tried out our service at the pilot areas are very happy and excited to use our services and the feedback has been great overall from the customers.
People are excited that there is something new in the market. The option of having a choice in itself is always welcomed positively since people love having options at their disposal.

Capital: On Thursday October 6, 2022 you had a national launch. Do you think it was the right time to have the national launch?

Anwar Soussa: The national launch comes at a perfect time following our string of successful launches across ten pilot cities. Since Addis is the heart of the country where the government sits, we thought it best to have a national launch ceremony here, with high government officials in attendance to set our operations rolling at a national scale.

Capital: Price points play an integral part in customer acquisition. Currently, Safaricom Ethiopia’s internet tariff is equal to Ethio Telecom but there is a notable difference in the voice tariff. Why is that? How is Safaricom Ethiopia preparing to be competitive on that front? (Since many people have been expecting you to come up with a lower price than Ethio Telecom)

Anwar Soussa: We are going to be competitive with Ethio Telecom when it comes to tariff pricing but it should also be understood that we are not coming in to destroy the market. Some competitors enter the market with low offerings to disrupt and destroy the market in a bid to acquire customers. That is not our objective.
Our objective is to provide an option for customers in the country and to ensure that we do our best to build on the infrastructure that they have. We want to have a competition that would make us and Ethio Telecom thrive in propelling the telecommunication landscape in Ethiopia, at the benefit of all of our esteemed customers.

Capital: Ethiopia’s Safaricom tariffs are significantly lower than that of its counterpart in Kenya. How will you ensure profitability when compared to Kenya’s market?

Anwar Soussa: The population reflex in Ethiopia is twice as big as that of Kenya. So the customers acquired will make it to balance out if not cap higher in profits, since more customers correspondingly leads to more revenues.

Capital: How many cities are you planning to cover by the end of 2022?

Anwar Soussa: We’re using 2023 as our reference date guide so to speak. So, basically by March 2023 we’re hoping to be in 25 cities.

Capital: Do you think your plans might suffer delays?

Anwar Soussa: There is always a possibility for a delay but so far things are running smoothly as per plan and we hope to accelerate beyond our target.

Capital: How is the infrastructure sharing process with Ethio Telecom coming along?

Anwar Soussa: It’s going on very well. With regards to the desire and goodwill of sharing, I would say it is at 100 percent but the actual execution is a little bit slower.
What I mean by that is more often than not on instances of sharing, a designated team is set to handle the deliberations in partnership with a technical side. Since sharing is fairly a new ground to cover, the details that go round about the structure is not fully accomplished and that takes a fair amount of time. Having a dedicated team to handle the issue will make the agreements to move along a bit faster. I think that their desire or their intention to share is there, and accordingly a detailed mutual agreement will be in the horizon sooner rather than later.

Capital: Have you used Ethio telecom’s infrastructure in the cities that you have launched in?

Anwar Soussa: We are using the fiber. Regarding towers, I think we’ve used a few of them. But don’t forget we only got them recently so we are hoping to accelerate the co-location rollout by next year.

Capital: What are some of the challenges Safaricom Ethiopia has faced thus far?

Anwar Soussa: We had initially presumed that importation of equipment that was worth 300 million USD to be challenging. Since we are not a public sector, we were not sure on how the importation process would pan out. However, the customs authority has been of great help and we have managed the importation of the equipment quite smoothly.
Other issues we have faced include land, training of the health and safety workers, inflation and foreign currency. For instance, since there aren’t many multi- international organizations that work here, we have to train huge amounts of construction workers on the proper codes as per international standards of health and safety.
So everyone has been wondering why our different tariffs are higher than Ethio Telecom and this is attached to the high running inflation in the country that is about 35 to 37 percent. Since the environment is highly inflated we are trying to adjust ourselves accordingly. With regards to making re-investments in the future, there might be a foreseeable challenge in terms of foreign currency provision.

Capital: How are you working to solve these challenges especially with regards to foreign currency and land?

Anwar Soussa: Currently, we are bringing in the dollar so it might not pose a major challenge. Of course foreign currency shortage is a challenge for the government and we know that the government is working round the clock to drive the country’s economy in the right trajectory so as to solve this issue.
With regards to land we have understood that it is not only a difficult case for us but also for everyone. Despite the complicated issue, we have learnt on how to best navigate the issue and we are comfortable with what we have now.

Capital: How much have you invest so far?

Anwar Soussa: So in terms of the license, we put in $850 million dollars plus around $300 million dollars in equipment in the first year and we intend to spend about $300 million in equipment for the first five years of operation.

Capital: How has the conflict in the northern part of the country affected your operations?

Anwar Soussa: First and foremost we hope for a peaceful resolution. To date it has not had that much of an effect since geographically the country is huge and we have had lots of areas to cover. Hopefully, when the issue is dealt with and peace restored we look forward to connecting the northern part to Safaricom as well.

Capital: A year ago when conflict was said to near the Capital, Safaricom employees had temporarily left Ethiopia. In the unfortunate case that this was to re- occur, do you think that would happen again?

Anwar Soussa: When this transpired, staff left as safety is always important; but the management came back two weeks after. However at the time, we did not have our infrastructure on ground. If in the unfortunate case that this was to re- occur, I do not see us leaving since we have ground investments. We will weather any storm that comes since we are now part and parcel of the country’s telecommunications sector.

Capital: You recently said that ‘we don’t want a price war with Ethio Telecom’. Could you elaborate on this?

Anwar Soussa: A price war is psychological right? By way of definition it is a competitive exchange among rival companies who lower the price points on their products, in a strategic attempt to undercut one another and capture greater market share. What I meant through my quotation at the time was that we are not here to destroy the telecommunications business through undercutting prices to gain market share.
We have to cap at price points where we feel it’s the best offering from us as a telecommunications firm so as to have a positive return in investment. As earlier stated we want to harbor a healthy competitive market rather than engage in lowering price points so as to benefit our customers at large whilst prospering the telecommunications industry in the country.

Capital: Are the tariffs the lowest price point that Safaricom can offer to its customers?

Anwar Soussa: For the last two years Ethio Telecom has been slashing its prices and given the inflation in the country I don’t think that even our competitors can go lower than where they are currently at. Likewise, for us as we test the waters, it will be difficult for us to go lower as the prices are already low.

Capital: Are you working with local banks? How do you source the local currency?

Anwar Soussa: We are currently working in tandem with the big local banks. We bring our foreign currency for most of our needs meanwhile the local banks support us with financing.

Capital: What’s your view of government’s support?

Anwar Soussa: The Government has been extremely supportive starting from the liberalization process. The telecom industry will be one of the biggest successes of the decade in terms of government led initiatives. So everybody understands this, and I think the benefits of this project will be massive.

Capital: Is Safaricom interested in having a stake in Ethio Telecom?

Anwar Soussa: No. You cannot invest to a direct competitor. So we don’t have plans to have a stake in Ethio Telecom.

Capital: Since you are building your own towers are you going to continue to work with Ethio Telecom?

Anwar Soussa: Despite being competitors, we really like to work together. Frehiwot Tamiru, the CEO is among the best CEOs I have met. She’s an excellent leader and she knows her company and the industry extremely well.
We have been working with Ethio Telecom and we’re going to continue to work with them in terms of sharing. As we continue to build our own infrastructure, we will continue with our co-location to which we are appreciative.

Capital: In some places, we can spot Safaricom and Ethio Telecom’s towers next to each other, though one of the targets was to share resources. Doesn’t this contradict with the plan?

Anwar Soussa: The negotiation on the agreement took longer than expected and since we have an obligation to government coupled with the time urgency on some of the locations, such instances occurred.

Capital: What are your focus areas?

Anwar Soussa: We want to make an imprint in the space of data provision from 4G up to 5G for our customers to enjoy seamless services. We also want to provide great financial services and inclusion through our M-Pesa platform which has made a huge difference in Kenya and we want to replicate the same in Ethiopia. So in long haul our vision to provide the best Data and financial experience.

Capital: Do you think M-pesa could get the same acceptance in Ethiopia as Kenya?

Anwar Soussa: I am certain it will have a great acceptance. The M-pesa ecosystem has re-imagined how we approach mobile banking and when we integrate Ethiopia to that ecosystem the same success will be realized in the country as the services that will are provided in Kenya will be the same as Ethiopia.

Capital: Safaricom is said to be planning on using satellite networks in Ethiopia. How is this plan panning out?

Anwar Soussa: We have plans to use satellite networks. However, this could take a couple of years before it is fully operational.

Capital: Besides investment and increasing digitization, job creation remains integral to economic growth. To this regard, how many people has Safaricom employed?

Anwar Soussa: The firm has created 400 employment opportunities to the locals and 250 expats, in total 650 (directly). However, this figure will be higher when the ecosystem blossoms to become bigger. We are also working with 1500 local deals and have indirectly led to employment opportunities thousands of employees.