Friday, April 19, 2024
Interview“We don’t want a price war with ethio telecom”

“We don’t want a price war with ethio telecom”

Anwar Soussa has been the Managing Director (MD) of Safaricom Ethiopia since July 2021. He was the Managing Director of Vodacom DRC and the Chairperson of Vodacash (M-PESA), a position he has held since 2017 until joining Safaricom Ethioia. During his tenure, Vodacom DRC made major strides in operational performance, crossing the USD half a million in service revenue mark for the first time in 2020. The Reporter’s Samson Berhane sat down with him to understand his new beginnings in Ethiopia.

The Reporter: First, tell us about your journey in the telecom sector.

Anwar: I have been in the telecom sector since 2006. But I started in the technology sector since 1996 in Montreal, Canada. I joined Safaricom Ethiopia, the project, when I was in Vodacom in Congo. I was a CEO there. My experience perfectly suited for this type of operation.

Safaricom has been preparing for more than a year to launch service. Why did it take so long? What were the problems that you have faced while doing so?

I don’t call it a problem. I call it a challenge. Initially, when we come into the market, the idea was to launch using ethio telecom infrastructure. That agreement took longer than expected to finalize. As a result, we choose to build our own towers. We did not want to wait. To build towers, you have to find land, import materials like steel and find cement as well as hire sub-contractors. That means you need more time than the initial plan. That is the real reason why it took longer than expected to launch service. Now, we signed a deal with ethio telecom and things are gonna move faster.

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Tell us about the detail of the deal. I heard you are going to pay in both local currency and USD to lease the infrastructure of ethio telecom.

I am going to keep the deal private because that is between us and ethio telecom. But there is a dollar component. The reason is, as well all know, there is a forex shortage in the market and to prepare a site for us, they are required to import materials from abroad. We recognize that. We agreed to make the component in dollar for them to make the site ready for us.

So, the negotiation is now over?

Ethio telecom has been a very good partner. The CEO, Frehiwot, has been gracious in terms of engagement with us. Everything is proceeding well. The delay was due to operational issues. How many juniors were available? How fast we can get steel? How fast we can upgrade the site? All of these are operational issues.

When you launch service in Dire Dawa, you have used your own infrastructure.

That’s correct. When we launch service, initially, we are using our own infrastructure. But as we move forward, we will be sharing infrastructure of ethio telecom and build our own in the meantime.

Is there any change in equity contribution of shareholders in Safaricom Ethiopia? Some say, there is. Is that true?

No, there is change.

As Safaricom is listed in the stock market, a change is expected when something new happens. Have you seen any change recently after you launched service?

I don’t think it is possible for you to attribute any change to a certain element. The reality is the World’s stock market has been very volatile over the past six months. There is a war and a global recession coming in. Certain things happening are way beyond the control of a certain company or what we do here in the ground.

What should Ethiopians expect from Safaricom? Many hope Safaricom will come up with a better quality of service with a lower fare.

The pricing move from ethio telecom last year was very strong. They brought down massively. I am not sure if it will be possible to bring down price from what is in the market now. However, in terms of quality, my expectation is that the quality overall in the market will improve. And the reason I say that is because we are setting up a new network and ethio telecom, or the competition, will not stay still, I expect they will bring the best game in the table. Quality of service, both in technological level and in customers’ service, will be improved massively. How customers’ complaints are going to be taken care of? I think these are areas where you see a major improvement.

The price that you are charging is almost similar with ethio telecom. Do you think you can be competitive in the market, while charging the same price, as people expect a lower fare from you?

The price for voice is one of the most aggressive in Africa. And I don’t think there is a room to drop voice prices. So do I think we can be competitive? Yes, I do. The most important thing we want to flag is that we don’t want a price war with ethio telecom. If we start a price war, that means they will automatically react. There is no way there is going to sit by and see us dominate the market because our price is cheaper. I think that will a detrimental impact on the market, not only on us. I don’t think you see a change in terms of price.

The infrastructure deal took more time than you anticipated. The global market is not helping too. Did you make any change in your financial targets, considering the challenges you have faced since you secured the license to operate in Ethiopia? For instance, do you still think it is possible to achieve breakeven within five years, as outlined in your initial plan?

Yes, I do think so. I think the biggest challenge is the global inflation. The price of fuel is increasing. The same is true for cement and steel. All these things are going to be more expensive. I think this element of the business will be very challenging. Yet the plan is still to breakeven within four or five years. But we have to pay attention to the cost.

You are investing heavily in infrastructure development. And can you tell us how far you have gone thus far?

We will continue to invest with the money that we allotted when we started the business. Some places are easier. Addis is easier than the regions. This is because there are a lot of buildings to put on the antennas. So it is simple to deploy in Addis than other areas.

If it is easy, why did you first launch service in Dire Dawa?

That is a small town. It requires fewer sites. It is easy to optimize. The network rollout was very fast.

How long it would take to launch service in Addis?

Six weeks. We believe there is a massive opportunity in the capital, in every element. I have been working in 12 countries. I never had been in a country where a single company dominates everything. The market will be split.

Is there any place that you want to capitalize on, especially an area where ethio telecom has a little presence?

That is a nature of businesses. You grow until there is no place to grow.

How long it would take for you to be independent from ethio telecom?

I don’t think we want to be independent. The reason I say that is because old days where everyone builds its own infrastructure are gone. You have to share infrastructure. That makes more sense because that does not have any impact on your competitiveness. Why do you build a fiber where there is a fiber? That will be a waste of money.

There has been a social media outcry against your recruitment process. What is your reflection on this?

To be honest, I think it was not only on the recruitment process but also on the language we are using. It was also about distributors and how we are allocating distributors across regions. It was also about the religious mix of what we have in the office and what we have employed everywhere. There were a bunch of requests the activists raised with us. So, we did not respond immediately because we were supposed to understand whether these are true or not and see ourselves if there are problems. To be honest, I don’t think the problems are as acute as people are saying. What they did say is to be careful. For instance, if we go to Oromia, we have to use Afan Oromo. We have to pay attention to laws. We have put signs saying coming soon. It was us not being sensitive. We met guys behind the campaign. They were very moderate. None of them want to hurt Safaricom. They want what we do to be fair. They did not make extraordinary demands. That’s why we are comfortable to engage with them. I understand we have to be sensitive to the history, the culture and the current politics without going too far. It has to merit-based. Everybody coming to the company should be the best of the best. We have received a lot of advises from the government. All of them said “you must choose the best but be careful.”

Do you think it is possible for Safaricom to apply meritocracy in light of the current situation in Ethiopia?

I think there has to be a meritocracy. The qualification of the candidates has to be there. There should be no compromise. However, as we choose candidates, the priority must be given to the people within the region. It is not appropriate to start shifting from one region to another. Not because of other issues but language considerations are critical. People have to speak the language of the area where they are working.

Now let us talk about mobile money. I know you are in the process of launching M-Pesa here. Do you see any progress from regulatory body in introducing a legal framework to govern the sector?

The legal element is going fine. I think it is gonna be available very soon. Our shareholders are engaging with the government. From operational perspective, things are going well. We have put the app in place. We have put configurations in place. Everything is in a good shape. In technically perspective, we will be ready to launch service in the next three months.

The approval process of the bill may take another three months. Do you think that will have an impact on your plan?

No. We got so much to do.  We have 25 cities to cover. We have massive network to build.

Do you think you can repeat the success of M-Pesa in Kenya here in Ethiopia?

Absolutely. Kenya is particularly amazing story. Wherever we launched M-Pesa, we were successful and we are leading the market. So we don’t see any way it is not going to be successful in Ethiopia.

Ethio telecom is already advancing in the mobile banking market. Are you expecting fierce competition when you launch M-Pesa?

I do expect very strong competition. They have done a great job in recruiting customers and strengthening the network.

From what I have observed, ethio telecom is taking an advantage of its link with public offices to facilitate payments in the public sector? Have you get any promise from government officials whether you will get the same opportunity when you launch M-Pesa?

We are talking them to now. There is no one said we are not going to get this opportunity. Yes, they had a one year head start. They have done great job in services they have launched. Yet I believe we can catch up.

How is the war in North Ethiopia affecting you?

We have a huge amount of work to do. I think it will slow us down in certain areas but we will continue doing our work in other areas. But everyone is sad to see the resumption of conflicts.

Are things in place to launch service in North Ethiopia, particularly in Tigray, if the war ends?

We will be ready as soon as communications are stored and get the blessings to go back in. We want to reach all over Ethiopia.

My last question is on repatriation. Many international companies usually complain about the difficulty of repatriating profit in Ethiopia. Some say it takes over a decade. How is your plan in that regard?

Repatriation is not a big issue. The issue is finding dollar to buy equipment after the investment window closes. After our money runs out, we need to get forex to buy equipment. Regarding repatriation, we knew the issues when we came. If it takes 10 years, it takes 10 years. We gonna be here longer than that. Of course, we want to repatriate but we are here for long term.

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