Safaricom rides on M-Pesa, data to post Sh74.7b profit

Thursday, April 30th, 2020 00:00 |
From left: Safaricom PLC chairman Nicholas Ng’ang’a, chief executive Peter Ndegwa and chief financial officer Sateesh Kamath chat after the announcement of Safaricom’s 2020/21 financial year results at the Michael Joseph Centre in Nairobi. Photo/PD/ALICE MBURU

Safaricom’s net profit soared by 19.5 per cent to Sh74.7 billion for the full year ended March this year, exciting stakeholders amid Covid-19 shocks, despite declining voice and SMS revenues.

The telco posted Sh64 billion the previous financial year.

Safaricom’s record growth was driven by growth in revenue from its mobile financial services business M-Pesa and internet provision.

Earnings from M-Pesa, which allows users to transfer cash and borrow and save through the Application, soared 12.6 per cent to Sh84.4 billion, making for a third of Safaricom service revenue.

The impressive profit growth happened despite revenues from M-Pesa suffering a Sh1.9 billion hit following the withdrawal of revenues from betting in late 2019.

Mobile data revenue rose by 12.1 per cent to Sh40.7 billion, as move to scrap expiry on data bundles paid off.

Digital transformation

Speaking during the release of the report, Safaricom chief executive Peter Ndegwa said the success of the firm’s ongoing digital transformation will bank on a stable and strong network and will leverage growing demand for technology during the Covid-19 pandemic.

“In the last financial year, we invested more than Sh36 billion in the network and expect to increase this in this financial year,” he said.

Safaricom sees the Covid-19 pandemic present an opportunity for the telco to leverage digital and data capability to support customers and the community during this period and through the recovery process.

“We will focus on developing a range of digital products and services that will provide sustainable solutions to challenges in sectors like agriculture, health, education and essential services,” said Ndegwa.

Voice and message revenues continued to fall to reflect continued pressure on the two traditional streams from new communication streams with earnings from the two declining by 1.4 per cent and 12.3 per cent to Sh4.5 billion and Sh17.2 billion.

The telco’s financial performance continued to dwarf other publicly-listed companies in Kenya, distancing the closest rival with a balance of Sh50 billion in profit after tax.

Regulatory environment

Equity Group posted Sh24.78 billion profit last year up from Sh22.41 billion the previous year while East African Breweries Ltd posted Sh11.5 billion profit after tax for the period ending June 30, 2019 up from Sh7 billion.

“My appeal to the government therefore, is to ensure the regulatory environment that follows post-Covid-19 is designed to support revival of business and return to profitability,” said Safaricom chairman Nicholas Ng’ang’a. 

Ng’ang’a said the financial performance released yesterday shows that last year, Safaricom sustained more than one million jobs through direct and indirect employment, with 74 per cent of its procurement spent locally and contributed Sh111 billion to the exchequer.

This is in addition to other levies in terms of licences and spectrum fees, tax payment and support for a broad ecosystem of agents, suppliers, dealers and business partners.

To date, said Ng’ang’a, Safaricom’s total contribution value  in the fight against the pandemic stood at Sh6.5 billion, a cost he said is growing every day.

To make life bearable for Kenyan’s through the Covid-19 pandemic, the company is giving a 90-day home bandwidth at no extra cost, thermal camera worth Sh10 million to the Ministry of Health, free bank to and from M-Pesa transactions and food donation worth Sh200 million.

The company has also zero-rated charges for hospital and dispensaries as well as free person and Lipa na M-Pesa transactions of up to Sh1,000.

More on Economy and Policy