Safaricom posts a 19.5% growth in profit as it launches program of selling 4G devices to its customer

KENYA – Safaricom, a telecommunication company, has posted a KSh74.7 billion (US$696.39m) net profit for the year ending March 31, 2020 representing a 19.5 percent growth in earnings from 2019. 

The new record profit by the telco operator is largely attributable to growth from M-Pesa and data with the respective streams rising by 12.6 percent and 12.1 percent to stand at KSh84.4 billion (US$786.82) and KSh40.7 billion (US$379.43m) respectively. 

The growth in M-Pesa revenues is in spite of the income head taking a hit of KSh1.9 billion (US$17.71m) from the withdrawal of revenues from betting in late 2019. 

The two revenue heads drove service revenue to a high of KSh251.2 billion (US$2.34bn) from KSh240 billion (US$2.24bn) in the last reporting period supported in kind by fixed service revenue which grew by 10.7 percent to KSh8.97 billion (US$83.62m). 

Former Safaricom Chief Executive Officer Michael Joseph has attributed the performance to the company’s recapture of its customers’ needs which saw the firm in part simplify its voice and data offers in October. 

“My primary aim on my second stint was to regain the trust of our customers and timely deliver the needs. The results presented mirror this,” he said. 

Voice and message revenues continued to fall to reflect on continued pressure on the two traditional streams from new communication streams with earnings from the two declining by 1.4 percent and 12.3 percent to KSh94.5 billion (US$880.98m) and KSh17.2 billion (US$160.35m). 

Safaricom however continued to find efficiency in costs as total operating costs fell for the first time by 4.9 percent to KSh47.6 billion (US$443.75m). 

“We have become more agile and have for the first time reduced our operational costs year on year. Our capital expenditure is reflective on this efficiency and greater monetization.” noted Safaricom Chief Finance Officer Sateesh Kamath. 

Earnings before interest and tax (EBIT) rose beyond the Ksh.100 billion mark to stand at KSh101.5 billion (US$0.95bn) from KSh89 billion (US$0.83bn) last year. 

The firm has suspended giving a guidance on its next earnings owing to ongoing uncertainties brought about by the Covid-19 pandemic. 

Safaricom however says it will focus on growing more uses for its mobile money services along with deepening its penetration of data as internet usage registers a spike from mass usage during the pandemic. 

“Covid-19 has brought technology at the forefront. This present an opportunity for us to leverage on the shift,” said Safaricom’s new CEO Peter Ndegwa. 

Safaricom’s board has recommended a KSh1.40 (US$0.013) dividend pay-out to shareholders up from KSh1.25 (US$0.012) last year from an earnings per share (EPS) of KSh1.84 (US$0.017). 

Safaricom has also launched a programme, Lipa Mdogo Mdogo, to enable Kenyans to buy 4G smartphone devices for as low as KSh20 (US$0.19) per day.  

The new campaign seeks to empower an extra one million customers to upgrade to 4G enabled devices in this financial year, CEO Peter Ndegwa said.  

Ndegwa said the package, in partnership with Google, is based on insights and learning from the Maisha Ni Digital campaign that saw over one million customers acquiring 4G enabled devices.  

“Smartphone device is critical in supporting the new realities brought about by Covid-19. This proposition aims to support Kenyans during and beyond this pandemic by enabling them access more opportunities, be it learning, working or running businesses from the comfort of their homes,” Ndegwa said.  

“Android’s goal has always been to bring the power of computing to everyone. Access to the opportunities the internet offers is critical for any nations’ economic growth and social inclusion. Majority of Kenyans and Africans at large access the internet via mobile broadband.”  

In Kenya approximately 60% of the mobile phone install base is still on 2G feature phones and 40% smartphones with key barriers to people coming online being device and data affordability.  

“We believe that this collaboration with Safaricom will bring more Kenyans access and the means to partake in the opportunities that exist online,” Mariama Abdullahi, Director, Android and Platforms Partnerships for Africa said. 

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