Safaricom's ambitions in the Ethiopian telecommunications market received a significant boost following the Ethiopian Communications Authority's (ECA) decision to slash mobile termination rates (MTR), offering a promising landscape for its subsidiary, Safaricom Telecommunications Ethiopia Plc.

Effective from May 1st, the reduction in MTR to 0.23 Ethiopian Birr (Sh0.54) per minute from ETB0.31 (Sh0.72) per minute marks a substantial 25.8 per cent decrease.

This move, according to Balcha Reba, Director-General at ECA, aims to promote competition and ensure fairness between the operators, including Safaricom's subsidiary and Ethio Telecom.

"The intention is to promote competition among operators, prevent anti-competitive behaviour, and encourage a market structure that benefits consumers by offering them a variety of choices and competitive prices," Reba stated.

Safaricom, despite holding a dominant position in Kenya's telecommunications market, faced revenue challenges following similar rate cuts in its home market.

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With over 66 per cent of subscribers, the company incurred significant losses amounting to approximately Sh2 billion in the previous financial year.

However, for Safaricom Telecommunications Ethiopia Plc, the rate reduction comes at an opportune moment.

The subsidiary, having onboarded nine million customers in the nine months leading to December last year, is poised to leverage this regulatory adjustment to enhance its competitive edge.

With offerings encompassing voice, SMS, and mobile money products, Safaricom's Ethiopia venture aims to expand its market share further.

Supported by 2,242 base stations, including 1,252 built by Safaricom, covering 33 cities, the subsidiary is strategically positioned to capitalize on Ethiopia's evolving telecommunications landscape.

Safaricom's entry into the Ethiopian market, initiated in October 2022, reflects its commitment to diversifying revenue streams beyond Kenya.

The recent regulatory support sets the stage for Safaricom Telecommunications Ethiopia Plc to navigate the Ethiopian market with enhanced competitiveness, aiming to surpass previous revenue milestones and establish a robust presence in the region.