Kenya’s listed mobile phone operator Safaricom recorded 14.4 per cent growth in net profit for the six months to September 30, buoyed by increased activities on its mobile money payment platform M-Pesa and a surge in the usage of its mobile data bundles.
The telco, whose overall customer numbers climbed to 34.6 million from 26.6 million, generated Ksh35.65 billion ($356.5 million) in net earnings compared with Ksh31.17 billion ($311.7 million) in the same period last year.
This is despite a difficult operating environment in Kenya–its main market–which is characterised by falling disposable income among households and increased regulatory actions.
“We have achieved solid results, driven mainly by M-Pesa performance, despite challenges in the economy,” said Michael Joseph, the firm’s acting chief executive.
According to the firm’s unaudited financial statements released on Friday, total revenues increased 5.8 per cent to Ksh129.90 billion ($1.29 billion) from Ksh122.83 billion ($1.22 billion), with M-Pesa contributions to the total revenues increasing to 33.8 per cent from 26.4 per cent, and that of mobile data rising to 15.9 per cent from 13.7 per cent.
Fixed data contributions to total revenues also increased to 3.7 per cent from 2.4 per cent.
M-Pesa revenues grew 18.2 per cent to Ksh41.97 billion from Ksh35.52 billion while revenues from mobile data increased four per cent to Ksh19.78 billion ($197.8 million) from Ksh19.01 billion ($190.1 million).
On the other hand, voice and messaging revenues declined 1.4 per cent and 11 per cent to Ksh46.87 billion ($468.7 million) and Ksh8.6 billion ($86 million) from Ksh47.53 billion ($475.3 million) and Ksh9.67 billion ($96.7 million), respectively.
Analyst at AIB Capital said mobile money remains Safaricom’s key growth frontier.
“The introduction of (credit facility) Fuliza is likely to have led to an increase in M-Pesa transactions,” said AIB capital.
Network infrastructure
The firm is keen on increasing investment in network infrastructure to support its growing customer base and uptake of innovative products, with the development of its 4G network remaining a key strategic objective in the current financial year ending March 30 2020.
During the six months to September 30, the firm’s capital expenditure stood at Ksh18.11 billion ($181.1 million) largely financed from internally generated funds.
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Safaricom is 35 per cent owned by South Africa’s largest mobile phone operator Vodacom and the government of Kenya which owns a similar stake. British Vodafone owns 5 per cent of the shares while the remaining 25 per cent are held by individual and institutional investors.
Safaricom, which recently appointed Kenyan Peter Ndegwa from the British alcoholic beverages company Diageo Continental Europe as its chief executive, is keen on expanding its operations in Africa with an eye on Ethiopia as the initial target market.
Mr Ndegwa is expected to assume office in April 1 2020.
Ethiopia has announced the privatisation of its state-owned Ethio Telecom and the auction of two new telecoms licences, both presenting opportunities for companies seeking to penetrate its telecom sector.
It is argued that his vast experience on the global front, is an indication that Safaricom is gearing for its next phase of growth that entails expanding its business beyond the Kenyan market.
The telco is in the process of acquiring the intellectual property rights for M-Pesa from Vodafone to be able to roll out the service across Africa.
