Standard Bank’s $138M Boost for Safaricom Ethiopia Spawns Digital Opportunity

The USD 138 million facility (approx KES 17.94 billion) positions Standard Bank (via Stanbic Kenya and Ethiopia) as a core financier for STEP’s next growth phase. The deal’s structure—where Standard Bank serves as sole arranger, lender, facility agent and advisor—indicates both high confidence in Safaricom’s operational trajectory and significant risk exposure should regulatory or execution challenges emerge. [1][2]

Ethiopia’s telecom sector is undergoing liberalization: Safaricom won its operating license in 2021 and is challenging a dominant incumbent, Ethio Telecom. However, while STEP has achieved 10.1 million three-month active users in four years, this remains small relative to Ethio Telecom’s over 70 million subscribers; thus, the potential upside is large but so is the competitive and regulatory tail risk. [4][1]

In broader strategic terms, this funding supports digital infrastructure that underpins mobile internet connectivity and financial inclusion, particularly mobile money services. As STEP scales, mobile money (such as Safaricom’s own M-PESA) and fintech tie-ins may become significant revenue sources, especially if regulatory frameworks become more favorable toward non-incumbents. However, conversion of added coverage into sustainable profits will depend heavily on ARPU (average revenue per user), infrastructure cost, and regulatory cost burdens. [5][1]

Other strategic actors gain: the Ethiopian government can showcase growth in internet penetration (from 15 % to 19 %), reflecting impact of recent reforms (2020-2024), with socioeconomic implications. From a risk perspective, key open questions include the pace and consistency of regulatory support, spectrum licensing, competition, capex demands vs cash flow, and whether Standard Bank’s loan will be structured with covenant protections (e.g. performance metrics or security). There is also FX risk, given cross-border exposure and potential currency volatility in Ethiopia. Operationally, the success in underserved rural or peri-urban areas could define both risks and rewards in repayment and uptake.