Safaricom Ethiopia FY26: From Financial Sinkhole to Foundational Scale

Safaricom’s entry into Ethiopia has always been defined by the sheer weight of its ambition and the terrifying depth of its costs. When the network switched on in October 2022, it was a leap of faith into a market of 115 million people, balanced against a backdrop of civil unrest and a volatile currency. By May 2025, many observers labeled it a "financial sinkhole"—a venture where billions in capital seemed to disappear into the friction of Ethiopian macroeconomics.

Yet the FY26 results released this week suggest that framing is officially obsolete. While the road to net profitability remains long, the business has successfully transitioned from an experimental build-out phase to a high-velocity growth engine. Let's talk about it.

The Revenue Reality

The most striking figure isn't the reported shilling revenue, but the underlying performance in local currency. Service revenue grew 130.9% to ETB 15.9 billion. While the Ethiopian Birr’s 23.7% depreciation against the dollar masks some of this progress in consolidated Group reporting, the operational momentum is still undeniable.

Operating losses (EBIT) halved from KES 61.1 billion to KES 30.1 billion. More importantly, EBITDA losses (the metric that tracks the actual cash burn of daily operations) shrank from KES 43.0 billion to just KES 15.1 billion. This trajectory has allowed management to set a firm milestone: **the Ethiopia operation expects to hit EBITDA break-even by the end of FY27. **

M-PESA and the Leapfrog Effect

Safaricom is effectively compressing two decades of Kenyan telecommunications evolution into a three-year Ethiopian sprint. M-PESA is the primary vehicle for this acceleration.

In just over two years, active 90-day M-PESA customers in Ethiopia have surged to 5.2 million. This represents nearly half of the total GSM customer base. For context, it took years for the Kenyan market to reach similar penetration levels. By bypassing the era of simple SMS-based transfers and moving straight into a sophisticated merchant and data-driven ecosystem, Safaricom is monetizing its 13.6 million customers at a rate that justifies the initial $850 million spectrum license fee.

Operational Key Performance Indicators (FY26)

Metric	Performance	Change (YoY)
Active Customers (3-month)	13.6 Million	+54.2%
Active M-PESA Customers	5.2 Million	+119.4%
Population Coverage	59.2%	+20% (approx)
Service Revenue (Local)	ETB 15.9 Billion	+130.9%

The End of Greenfield Growth

The nature of the investment is changing. Capex for Ethiopia in FY26 was KES 18.7 billion, a 52.2% drop from the previous year. FY27 guidance suggests a further tightening to between KES 6 billion and 9 billion.

With 3,504 sites now live and nearly 60% of the population covered, the strategy has moved from coverage at any cost to monetization of the existing footprint. The low-hanging fruit of greenfield expansion has been harvested; the next phase of growth must now come from increasing Average Revenue Per User (ARPU).

In Q4 FY26 alone, data ARPU jumped 22.5% following regulator-led price corrections. As Ethiopia moves away from some of the lowest telecom tariffs in Africa toward a more sustainable cost of service model, Safaricom’s unit economics are finally beginning to breathe.

The "Break-Even" Caveat

It is vital to distinguish between EBITDA break-even and actual profit. Hitting the FY27 EBITDA target means the Ethiopia office can finally pay its own electricity bills and staff salaries without asking Nairobi for a wire transfer. However, it does not account for the massive depreciation of the network hardware or the interest on the billions borrowed to fund the consortium.

Safaricom still anticipates an EBIT loss of KES 12–15 billion in FY27. Genuine net profit—the point where the Ethiopia bet pays back the shareholders—is likely three years away.

Risk Factors for 2027

The upcoming June 2026 elections and ongoing foreign aid disruptions create a fragile macroeconomic environment. Furthermore, the business remains hyper-sensitive to the Birr. If the currency undergoes another significant devaluation, the halving of losses seen this year could easily be erased in the next reporting cycle.

Nonetheless, for the first time since the Global Partnership for Ethiopia was formed, the conversation is better. We are no longer asking if Safaricom can survive Ethiopia. We are now simply counting down the months until it begins to thrive.