Business Unusual: M-Pesa App Blocked in Ethiopia As Safaricom Struggles To Penetrate Its New Market Amid War With Ethio Telecom

ADDIS ABABA – In a move that has sent shockwaves through Ethiopia’s nascent digital economy, customers of M-PESA Ethiopia awoke on December 3 to a nightmare straight out of a corporate thriller: locked out of their own money.

Just two days after the triumphant launch of the telco-agnostic M-PESA Lehulum app, billed as a game-changer for financial inclusion, state-owned giant Ethio Telecom slammed the digital door shut, blocking access via its mobile data networks.

Users clutching Ethio SIM cards from Ethiopia’s dominant provider, which controls over 90 percent of the market, found themselves staring at error screens, unable to log in, transfer funds or even retrieve deposits they’d made in good faith.

The betrayal stung deep.

“People were suddenly locked out of their accounts. These are people who have already signed up and deposited money. They are calling us saying they are unable to access their money,” M-PESA Ethiopia lamented in a stark public statement issued on December 5, framing the disruption as a brazen assault on consumer choice and net neutrality.

While Wi-Fi users could still navigate the app’s sleek interface for peer-to-peer transfers, bill payments and QR-code merchant scans, the mobile blockade left millions in limbo, underscoring the fragile fault lines in Africa’s second-most populous nation’s telecom turf war.

This isn’t a mere technical glitch.

It’s the latest salvo in a high-stakes battle royale between Kenya’s telecom titan Safaricom and Ethiopia’s entrenched incumbent, a war that has already cost the Kenyan giant hundreds of millions of dollars and threatens to turn its billion-dollar Ethiopian gamble into one of the most expensive mistakes in African telecommunications history.

The Billion Dollar Bet Gone Wrong

Safaricom Ethiopia, the audacious offspring of East Africa’s mobile money pioneer, shelled out a staggering 850 million dollars for its entry license in 2021, part of a one billion dollar plus investment blitz that promised to catapult the company toward 70 million group-wide subscribers by 2030.

Visions of M-PESA revolutionizing Ethiopia’s cash-heavy economy, where over 95 percent of transactions still rely on notes and coins, danced in executives’ heads.

Yet three years in, the dream is buckling under the weight of predatory pricing, infrastructure chokeholds and now, outright digital sabotage.

The numbers tell a brutal story.

Safaricom’s 2024 fiscal year epitomized the pain: 325 million dollars in losses on just 53.6 million dollars in revenue, barely covering the 66.7 million dollar annual license amortization.

Even as recent half-year figures show a glimmer of hope, with losses halved to 103 million dollars through forex reforms and stabilizing security in Oromia and Tigray, the path to breakeven by 2027 feels like scaling Everest in flip-flops.

The company has managed to attract only about 10 million subscribers compared to Ethio Telecom’s 83 million.

The state enterprise registered close to 700 million dollars in revenues in fiscal year 2024, more than 12 times what Safaricom earned.

Total capital expenditure has now exceeded 2.2 billion dollars, according to the World Bank, with little to show for it beyond mounting losses and regulatory frustration.

A Taste Of Their Own Medicine

Enter the irony, as sharp as a double-edged blade. Back in Kenya, Safaricom built its near-monolithic empire, commanding 90.8 percent of the mobile money market as of the first quarter of 2025, through tactics now haunting its Ethiopian foray: exclusive agent networks, on-net pricing favoritism that penalized rivals’ calls, deliberate delays in USSD access for competitors, and relentless lobbying to sidestep stringent oversight.

Interoperability mandates arrived too late, entrenching M-PESA’s dominance before Airtel Money or Telkom Kenya could mount a credible challenge.

By the time regulators enforced true competition, M-PESA was already too entrenched for competitors like Airtel Money or Telkom T-Kash to catch up.

Today, the tables have flipped with ruthless efficiency.

Ethio Telecom, bolstered by government favoritism and vertical integration into everything from digital payments to person-to-government transactions, mirrors those very plays: cheaper intra-network calls that bleed Safaricom 1.58 million dollars monthly on off-net traffic, bundled Telebirr discounts that lock in users, sky-high infrastructure leasing fees where Safaricom forks over three million dollars annually just for tower access, and crucially, this app blockade that reeks of calculated retaliation.

Whispers on Ethiopia’s vibrant social media ecosystem amplify the outrage and schadenfreude. “Safaricom should get a taste of their own medicine,” one user quipped, nodding to Kenya’s interoperability scars, while others decry Ethio’s move as necessary protection for domestic interests.

The World Bank Exposes The Rot

The World Bank’s scathing October 2025 Ethiopia Telecom Market Assessment lays bare the rot, painting a picture of a liberalization facade crumbling under monopoly muscle.

Ethio Telecom, deemed to hold significant market power in six key segments, prices voice calls below the regulator’s 0.22 birr per minute termination rate, forcing Safaricom to swallow losses on every cross-network dial.

Data tariffs, slashed to an unsustainable 16 US cents per gigabyte post-devaluation, come with club effect perks via Telebirr, luring customers away from rivals while most African operators hover above 25 cents.

The report accuses Ethio of predatory practices that violate fair competition principles, warning that without robust regulatory enforcement, Ethiopia’s Digital 2030 ambitions risk evaporating.

“Practices such as predatory pricing, bundling of services, and charging elevated rates for access to essential facilities act as deterrents for new players,” the study reads, warning that these behaviors risk violating fair competition principles, especially in the absence of a robust regulatory regime.

The assessment highlighted additional barriers to telecom investment, including limited infrastructure sharing with no independent tower companies, asymmetric licensing conditions where Safaricom paid 850 million dollars while Ethio Telecom paid nothing for comparable access, low average revenue per user, and constrained spectrum allocations.

Perhaps most damning, the World Bank revealed that Ethio Telecom has recently blocked access to Safaricom apps, including its flagship mobile money platform M-Pesa, and alleged possible preferential arrangements for state-owned enterprises in handling government mobile money transactions.

“These asymmetries jeopardize the long-term viability of the sector, which could unwind all the progress made to date,” the report warns ominously.

Fighting Back

Safaricom’s brass hasn’t minced words. CEO Wim Vanhelleputte, in a November 2024 plea that now rings prophetic, decried monopoly as a contradiction to liberalization, urging policymakers to level the field for Ethiopia’s 32 banks and fintech swarm to unleash true digital acceleration.

“Monopoly is a contradiction to liberalization. We have 32 banks, we have multiple fintech financial institutions, all of them should be able to offer digital payments. So, we ask policymakers, if we really want to accelerate Digital Ethiopia, we should try to get all the financial institutions equal access to offer digital payments,” Vanhelleputte said.

In its statement about the M-PESA Lehulum blockage, the company was equally forceful.

“The restrictions limit consumer choice, undermine net neutrality, and interfere with legally approved onboarding processes under the financial institution’s license framework,” M-PESA Ethiopia stated, positioning the fight as one about fundamental rights rather than corporate rivalry.

The World Bank echoes these concerns, calling for seismic shifts: cost-oriented infrastructure access, renegotiated interconnections, greater operational independence for Ethio Telecom, enforcement against discriminatory pricing and anti-competitive behavior, and even class licenses for low-earth orbit satellites like Starlink to pierce rural connectivity black holes. Bridging infrastructure gaps would require deploying 10,000 to 15,000 additional telecom towers, at least 15,000 4G or 5G capable radio sites, and expanding the national fiber optic backbone.

Absent these reforms, the assessment grimly forecasts a sector unwinding all progress made, with Safaricom’s 2.2 billion dollar capital expenditure war chest yielding diminishing returns amid asymmetric spectrum squeezes and infrastructure monopolies.

The Regulatory Roulette

The Ethiopian government has made some positive gestures. In May 2025, the Ministry of Finance issued a directive requiring all federal public institutions to accept payments from any licensed payment service provider, a regulation aimed at promoting fair competition and strengthening consumer protection.

However, the blocking of apps goes beyond the legal scope of that directive. It is a matter that requires intervention from both the National Bank of Ethiopia and the Ethiopian Communications Authority, neither of which has publicly commented on the M-PESA Lehulum blockage.

Ethio Telecom, predictably stone-silent when approached for comment, has long defended its low tariffs as a public good for low-income masses. CEO Frehiwot Tamru raised the issue during the company’s annual performance report in late July, saying the operator has deliberately kept tariffs low, even at the cost of profitability.

She underlined the contradictory pressures facing the company: once criticized for high tariffs, Ethio Telecom is now accused of keeping prices too low for rivals to compete.

“Our pricing is designed to remain affordable for low-income customers, even if this means the company does not maximize profit,” she said, characterizing the operator as an institution of impact rather than a profit-driven business.

Only 202 of Ethio Telecom’s 354 products and services had seen price changes since reforms began in 2018, while fixed broadband tariffs had been cut by up to 94 percent, she noted.

Kenya’s Lesson Unlearned

In Kenya, mobile network operators such as Telkom, Safaricom and Airtel eventually achieved interoperability across their platforms after years of regulatory pressure, enabling seamless mobile money payments to any merchant till number, regardless of operator.

This boosted the adoption and convenience of cashless payments and is widely credited with driving Kenya’s status as a global mobile money leader, even though Safaricom’s dominance was already cemented by the time these reforms arrived.

But in Ethiopia, such cooperation remains a distant dream.

The contrast is stark and painful for Safaricom, which benefited enormously from being first to market in Kenya but now finds itself on the wrong side of that same dynamic in Ethiopia.

The company’s chief technology officer James Maitai had spoken optimistically in August about targeting major growth in Ethiopia over the next five years, driven by the move to digital payments.

“In the next five years we should be able to talk of over 70 million subscribers, because it’s a big country. Cash is over 95 percent cash usage which means there is a huge opportunity to offer M-Pesa for payment and other financial services,” he said, though the company later clarified those subscriber targets were group-wide projections, not Ethiopia-specific.

Now, with the M-PESA Lehulum app blocked and customers unable to access their funds, those projections seem increasingly optimistic, if not outright fanciful.

The Stakes Couldn’t Be Higher

As regulators convene and keyboards blaze with accusations, this M-PESA melee exposes the brutal underbelly of Africa’s telecom gold rush: innovation thrives on open fields, but incumbents with state sinews fight dirty to till them alone.

Safaricom Ethiopia, ever the diplomat, insists it’s rallying the Ethiopian Communications Authority and National Bank for swift resolution, emphasizing collaboration’s role in financial inclusion.

The company says it is engaging regulators to restore access and framing the disruption as a matter affecting consumer choice and service continuity.

For Safaricom, the one billion dollar Ethiopian gamble, once hailed as the last frontier in African telecommunications, now teeters on the razor’s edge of regulatory roulette.

The Global Partnership for Ethiopia consortium, which includes Safaricom, Vodafone and Japan’s Sumitomo Corporation, bet big on Prime Minister Abiy Ahmed’s liberalization promises when they entered in 2021.

That bet is looking increasingly precarious.

Will Addis Ababa summon the will to enforce fair play, or will Ethio Telecom’s shadow eclipse the dawn of a truly connected Horn of Africa? For investors who have poured billions into Safaricom’s Ethiopian dream, for innovators betting on digital payments to transform the economy, and for everyday customers now locked out of their own money, the answer to that question couldn’t matter more.

As one thing becomes crystal clear in this unfolding saga: in the brutal arena of African telecommunications, what goes around truly does come around.

Safaricom built an empire in Kenya using tactics that crushed competition.

Now, facing those same tactics in Ethiopia, the telecom giant is learning the hard way that being on the receiving end of monopolistic practices is a very different, and far more painful, experience.

The stakes, for everyone involved, couldn’t be higher.