When news came in that Africa’s second most populated country was liberalizing its telecommunication market, everyone seemed interested. This liberalization, as termed by MTN Group, seemed to be the world’s last and largest telco liberalizations in world history. The privatization involved issuing two private telecommunication licenses as well as selling a minority stake in the state-controlled Ethio Telecoms. True to this, Africa’s largest telecoms teamed up with financiers with deep pockets to snap up one of the two licenses. Then came the shocker, the operating license did not include mobile money service. The license’s attraction diminished, leaving two major contenders, a consortium led by MTN and that led by Safaricom.

As things stand, Safaricom was issued with the first license after parting with $850 million. MTN’s bid was turned down, having bid $500million. The state monopoly embarked on its mobile money segment, Telebirr netting in more than one million subscribers in its first week. To sweeten the bid for the remaining license, Ethiopia has incorporated the mobile money service. This as communicated by the communication ministry, will also be included in Safaricom’s initial bid. As we await more competitive and possibly higher bids, the country has also invited bids for minority interests in its state-owned telecom, Ethio Telecom. The interested bidders in this line have been Orange and Etisalat.

To evaluate how lucrative mobile money is to African telecoms, we shall look at key developments in the continent. Kenya prides itself as the pioneer of mobile money business on the continent and the world. In 2019, Vodacom and its associate, Safaricom, bought the M-PESA brand, product development, and support services from Vodafone. The Mpesa brand’s value is estimated at $15.6bn when compared to multiples at which Airtel sold.

In 2021, Airtel Africa embarked on selling minority stakes in its Mpesa division attracting investors (Mastercard & TPG) bringing in a total of $300million. This has valued the enterprise at $2.65bn as it looks to sell a total of 25% stake.

Therefore, mobile money is an essential component for any telecommunication company in Africa going forward. With this in mind, the value of mobile money for telcos such as Vodacom has not been fully reflected in its shares when compared to Safaricom whose share has been on an upward trend since its listing. Something worth noting is that telcos eye improving their mobile money market shares since investment costs are low compared to other segments such as home internet and communication towers.

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