War broke out in Ethiopia last year between the federal government and the Tigray People's Liberation Front (TPLF).
Safaricom CEO Peter Ndegwa said the conflict could "significantly impact" the target of breakeven within four years of the subsidiary's launch. That however remained on track for next year, he told an investor briefing.
He said Safaricom now expects year to March earnings before interest and taxes of 97-100 billion Kenyan shillings ($870-897 million), down from previous guidance of 105-108 billion shillings.
Safaricom led a consortium of South Africa's Vodacom and Britain's Vodafone, and Japan's Sumitomo, in securing Ethiopia's second telecoms license in May, for $850 million.
The consortium plans to spend $1.5-$2 billion in the next five years to set up a network.
Ethiopia's conflict, in sharp focus in recent weeks as the Tigrayans made gains and threatened to march on the capital Addis Ababa, has killed thousands, forced more than 2 million from their homes and left 400,000 people in Tigray facing famine. The government declared a state of emergency on Nov 2.
"We hope for a fast and peaceful resolution to the current situation," Ndegwa said, adding that the company was focused on ensuring the safety of the small team which has been preparing the launch of the operation there.
Safaricom's first half core earnings rose by more than a quarter to 57.9 billion shillings, said Chief Financial Officer Dilip Pal.
Service revenue rose around 17% to 138.4 billion shillings, buoyed by a 46% jump in financial business M-Pesa.
($1 = 111.5000 Kenyan shillings)
(Reporting by Duncan Miriri; editing by John Stonestreet)
By Duncan Miriri
