Safaricom profit jumps 67% as Ethiopia losses shrink

East Africa's telecom heavyweight Safaricom has delivered a significant earnings beat, with group profit jumping 67% year-over-year, driven primarily by stabilizing losses in its Ethiopian subsidiary. The turnaround marks a critical inflection point for the Nairobi-listed carrier, which has battled regulatory headwinds and market saturation across its core Kenya operations while establishing footholds in neighboring markets.

The Ethiopia-driven momentum is particularly noteworthy. Safaricom Ethiopia, which launched commercial operations in 2022, had hemorrhaged cash as the carrier invested heavily in infrastructure buildout and customer acquisition in a fragmented telecom landscape dominated by state-owned Ethio Telecom. The shrinking losses signal that the subsidiary has moved past the capital-intensive ramp phase and is approaching operational breakeven—a milestone that typically precedes rapid scaling in African telecom.

## Why is Ethiopia critical for Safaricom's growth narrative?

Ethiopia represents Safaricom's most ambitious regional expansion outside Kenya. With 120+ million people and GDP growth averaging 7% pre-pandemic, the market offers far greater headroom than Kenya's saturated 50 million subscriber base. However, the path has been treacherous: fierce price competition, foreign exchange volatility, and regulatory uncertainty under Ethiopia's government-controlled telecom framework initially weighed on the operation. The improved results suggest Safaricom has adapted its go-to-market strategy, likely pivoting toward higher-margin services (mobile money, data) rather than pure voice competition.

## How does this reshape regional telecom investment patterns?

The earnings lift is also a signal to institutional investors that East African telecom consolidation and regional expansion remain viable. Safaricom's Kenya subsidiary continues to generate strong cash flows—essential for funding Ethiopian capex. The 67% group profit increase shows that even loss-making subsidiaries can swing sentiment if trajectory improves. International investors tracking African telecom exposure (via MTN Group, Vodacom, or Safaricom directly) should monitor Ethiopia's quarterly sequential improvement; consistent positive momentum could trigger analyst upgrades and re-rating.

## What are the macro implications?

Safaricom's Ethiopia gains also reflect broader East Africa economic recovery post-inflation. Improved affordability—after 2021-2023 currency devaluation hit disposable incomes—is driving telecom demand. Rising smartphone penetration in tier-2 cities is expanding addressable markets beyond Addis Ababa. Additionally, Safaricom's M-Pesa fintech ambitions in Ethiopia remain underdeveloped; once regulatory frameworks clarify (Ethiopia's National Bank has been cautious on mobile money), this revenue stream could provide upside surprise.

The risk: Ethiopia remains politically fragile, and telecom regulatory capture is real. Ethio Telecom's state ownership means competitive dynamics can shift overnight based on government policy rather than market fundamentals. Safaricom's Ethiopia dividend upside depends on the carrier maintaining government favor while scaling subscriber base to 10+ million—currently below 2 million.

For ABITECH readers, the takeaway is straightforward: regional telecom expansion in Africa is hitting an inflection where capital discipline meets market opportunity. Safaricom Ethiopia's path from losses to stabilization is a playbook other carriers will replicate. Monitor quarterly subscriber growth and ARPU (average revenue per user) for signals of sustainable profitability.

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