The free M-Pesa transactions for amounts below Sh1,000 at the height of the Covid-19 pandemic last year weighed down on Safaricom’s overall earnings for the year ended 2020.
The telco reported a 6.8 per cent drop in profit after tax of Sh68.7 billion for the year ended March 2021 from Sh73.7 billion in the previous period.
During this period, Safaricom enabled Kenyans to reduce the impact of the pandemic by waiving fees for transactions below a Sh1,000, which saw free transactions worth Sh4.4 billion processed.
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Service revenue, mostly from voice and data, recorded a marginal decline of 0.3 per cent to close at Sh250.35 billion driven by double-digit growth in mobile data business, which grew by 11.5 per cent to Sh44.79 billion. Amid the coronavirus pandemic, some companies implemented work-from-home arrangements that helped boost Internet usage.
M-Pesa and voice revenue declined marginally, with M-Pesa recording a 2.1 per cent drop to Sh82. 64 billion and voice dropping by 4.6 per cent to Sh82.55 billion.
“We remained resilient in a disruptive year, demonstrating strong operational capacity, diligence and commitment in supporting the country, our customers and shareholders through this uncertain time,” Peter Ndegwa, Safaricom CEO.
“Our immediate focus in the year has been to ensure that network capacity, operations and financial services are prioritized to limit disruptions.”
M-Pesa accounted for 33 per cent of the total service revenue down from 33.6 per cent last year, impacted by the waiver of the peer-to-peer transactions fees.
Speaking during the virtual release of the results, Safaricom Chairman Michael Joseph said the telco has embarked on a journey that will see it turn into a purpose-led company.
“This will see our attention in the coming months shifting to areas such as the agriculture, education, healthcare, support for Small and Medium Enterprises and regional expansion,” he added.
On regional expansion, Safaricom is leveraging on a new consortium to make an entry into the vast Ethiopian telecommunications market, to help it grow its revenues and market share to a new high.
In a statement released in April, the Ethiopian Communications Authority (ECA) said Safaricom was one of the members of a consortium that includes Vodacom Group Ltd (South Africa), Vodafone Group Plc (UK), CDC Group Plc (UK) and Sumitomo Corporation (Japan) that submitted bids for a nationwide telecommunication service licence.
The licence will allow the winning bidder (s) to roll out telecommunication services in competition with the State-run Ethio Telecom on voice and data across Ethiopia’s 112 million citizens.
“Under these licences, service providers will have the right to provide any telecommunication service including voice, text and data using any technology whether fixed or wireless anywhere within Ethiopia and to send and receive telecommunications to and from outside Ethiopia,” stated the ECA while inviting for bids.
The winning consortium will be allowed to have an initial licence term of at least 15 years with the possibility of renewal.
The company will pay Sh18 billion in dividends, which is Sh0.45 per share. Ndegwa said they estimate earnings before Interest to be in the range Sh105 – 108 billion in 2022.
