Safaricom profit dips 6.8 per cent to KES68.7bn on subdued M-PESA revenue

The move by Safaricom to offer free mobile cash transfers has seen the firm’s net profit for the year ended March 2021 decline 6.8 per cent to KES68.7 billion from KES73.6 billion recorded in the previous trading period.

During the year, M-PESA revenue went down by 2.1 per cent to KES82.6 billion from KES84.4 billion in a similar period last year. The decline is attributable to the telco giant’s move to zero rate money transfer charges in a bid to cushion customers from pandemic woes.

“We have not been spared from the tough operating environment, as evidenced by the dip in our service revenue, earnings before interest and tax and net income,” said Safaricom CEO Peter Ndegwa.

The company, in collaboration with the Central Bank, zero-rated paybills and tills for hospitals and dispensaries as well as Lipa Na M-PESA and transactions below KES1,000 a decision that was lifted from January 1, this year.

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The total M-PESA transaction value, however, increased by 58.2 per cent in the period to KES22.04 trillion while the volume of transactions grew by 29.8 per cent to 11.68 billion.

During the year that mobile transactions were encouraged to check the spread of Covid-19, Safaricom added 3.4 million one-month active M-PESA customers representing 13.6 per cent year-on-year uptick to 28.31 million. M-PESA now accounts for 33 per cent of the firm’s service revenue.

“We have also seen a shift in consumer behavior around M-PESA, with deposits and the associated commissions actually growing in the period,” said Safaricom’s Chief Financial Officer Dilip Pal.

With increasing calls for employees to work from home as well as online classes, Safaricom’s mobile data surged 11.5 per cent to KES22.6 billion from KES22.2 billion, sustaining a double digit growth trend from prior financial year.

“To ensure our school-going children continued with their education, we zero-rated websites hosting educational material and provided access to SMS-based learning material”, said Mr Ndegwa.

Active 4G devices grew by 39.8 per cent to 8.5 million while data customers using more than 1GB in our network grew 31.1 per cent to 6.1 million, the company statement say said.

Read also: Safaricom has one foot in Ethiopia telecom market

Safaricom, which recently placed bid to enter Ethiopia’s telecom market, plans to grow the uptake of mobile data by driving access to the network through 100 per cent population coverage on 4G which is currently at 94 per cent by incentivizing smartphone penetration through a device financing scheme.

The company’s fixed data revenue went up six per cent to KES9.5 billion from KES9 billion riding on increased penetration of fibre to home services across Kenya.

In the year under review, Safaricom’s expenditure on digital IT network decreased by 3.2 per cent to KES34.96 billion.

The telco giant expects their earnings before interest and taxes to be in the range of KES105 – 108 billion and Capex spend to be between KES40 and 43 billion for the financial year ending March 2022.

During this period, the Board declared for the first time, an interim dividend of 45 cents per ordinary share held amounting to KES18.03 billion and a final dividend of 92 cents per share amounting to KES36.86 billion has been proposed by the Board for approval at the next annual general meeting.

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