Safaricom PLC and partners have signed an agreement to borrow up to $500 million (55.7 billion) from the US International Development Finance Corporation (DFC) to cater for the expansion into Ethiopia.
The consortium dubbed Global Partnership for Ethiopia comprises of Safaricom’s parent companies, Vodafone Group Plc and Vodacom Group Limited. Safaricom has a 51pc stake with Vodacom owning a 5pc stake and the rest spread among other investors.
The DFC loan deal is part of the trio’s efforts to fundraise for the project should they be awarded the license. The companies expect the financial investment towards the Ethiopian market to cost about $1 billion (Sh111 billion)
” …up to $500 million (Sh55.7 billion) loan to the Vodafone-led Global Partnership for Ethiopia that will finance the design, development, and operation of a new private mobile network provider and the acquisition of a mobile network provider licence,” DFC said in a statement.
“The project is expected to have a highly developmental impact through the creation of a new private telecommunications network that will increase connectivity in Ethiopia while utilizing trusted technology.”
Loans from the DFC usually mature between 5 to 25 years and the repayment schedules are set on either a quarterly or semi-annual basis.
DFC fees include an upfront retainer for due diligence, origination fees that is payable on the first disbursement, commitment fee which is an annual percentage of the amount disbursed, and maintenance fee which covers the amount used to monitor the loan.
The move by Safaricom to seek expansion into Ethiopia was after their government invited foreign telecom companies as part of its homegrown economic reform agenda launched in 2019. The companies have been invited to buy a 40 percent stake in Ethio Telecom, in efforts to end monopoly in the sector and liberalize the country’s economy.
