Despite soaring user metrics, Safaricom’s expansion in Ethiopia is yet to yield meaningful financial returns.

Safaricom’s full-year FY25 results reveal a compelling paradox: in Ethiopia, the telco achieved explosive growth across all core customer metrics yet failed to translate this momentum into profitability.

As the company wraps up the final year of its Vision 2025 strategy and pivots to a 2030 outlook, Ethiopia remains both a high-potential frontier and a financial drag.

Surging User Growth in a Young, Underserved Market

Safaricom Telecommunications Ethiopia (STE) reported a >100% year-on-year growth in both total and one-month active customers, reaching 8.84 million and 7.25 million, respectively.

These figures underscore the scale of opportunity in Ethiopia’s underpenetrated telecom market, where over 120 million people, 70% of them under the age of 30, are only beginning to access mobile and digital services.

Data usage per subscriber rose dramatically, climbing 53.1% YoY to 6.46 GB, backed by a reliable 4G network now covering 50% of the population.

Messaging and voice segments also saw major increases in both user base and usage, with voice minutes per subscriber up 80.4% YoY and messaging revenue up 93.9%.

This commercial traction is matched by aggressive infrastructure rollout. Safaricom has built 3,141 active base stations, with plans to double this to 6,000 by 2030, a massive investment underlining its long-term commitment to Ethiopia.

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Mobile Money Expansion Still In Progress

Launched in August 2023, M-PESA Ethiopia is off to a slow start financially, generating only KShs 12.5 million in revenue for the year, a mere fraction of the KShs 161.1 billion generated in Kenya.

While volumes and customer numbers are climbing, 164.6 million transactions worth KShs 20.65 billion were processed. The lack of mature revenue streams means M-PESA’s true potential in Ethiopia is still unrealised.

Currency Crisis Erodes Value

The single largest barrier to profitability in Ethiopia has been currency devaluation. The Ethiopian Birr depreciated a staggering 117.1% YoY, dropping from 57.29 to 125.25 against the dollar.

Safaricom’s results absorbed this impact via International Accounting Standard 29 (IAS 29), which factors in hyperinflationary conditions.

This drastically reduced real earnings when translated to Kenyan shillings and led to a KShs 153.8 billion loss in foreign currency translation, wiping out the group’s total comprehensive income for the year.

Without the IAS 29 and FX impact, service revenue from Ethiopia stood at KShs 8.90 billion, a decent showing for a still young operation. But adjusted for hyperinflation, that figure drops to KShs 7.55 billion, thereby making the operation unprofitable.

No Profits in Sight Yet

The Group’s Earnings before interest and taxes(EBIT) from Ethiopia remain negative, and FY26 guidance suggests continued losses: an EBIT loss of between KShs 23–26 billion is projected, despite anticipated Capex of up to KShs 21 billion.

In comparison, Safaricom Kenya generated KShs 158.15 billion in EBIT, highlighting the stark contrast between the two markets.

While the company’s leadership has expressed confidence that the Ethiopian business will turn EBITDA-positive by FY27, this depends heavily on macroeconomic stability, regulatory parity, and widespread M-PESA adoption.

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Investor Perspective: A Long-Term Play

Safaricom’s Ethiopian venture is arguably its boldest strategic move in years. The numbers prove market demand exists, but operational profitability remains volatile.

The Ethiopian operation is still in its capital-intensive phase, with Safaricom betting that early losses will be offset by long-term dominance in a market where telecom and mobile money infrastructure is still being built from scratch.

For now, shareholders must contend with the duality of strong growth metrics without profits. If Safaricom can weather the economic turbulence and regulatory challenges, Ethiopia may still emerge as a profit engine by the end of this decade. Until then, it remains a promising but costly expansion frontier.

Ronnie Paul is a seasoned writer and analyst with a prolific portfolio of over 1,000 published articles, specialising in fintech, cryptocurrency, and digital finance at Africa Digest News.