Safaricom profit drops to Sh33 billion

Leading telecommunications service provider has reported a drop in revenue for the first time as the COVID-19 global pandemic continues to bite.

Profit after tax fell six per cent to Sh33b, down from Sh35 billion the previous year with the slump attributed to lower M-Pesa earnings following the Central Bank of Kenya's directive to remove fees on transactions less than Sh1,000. M-Pesa revenue fell by Sh6.1 billion while income from betting saw a Sh700 million-drop.

Impact of Covid-19 on Safaricom

“Our business has proved to be resilient despite tough operating conditions. There is no doubt that Covid-19 has dealt a huge blow to many people not just in Kenya, but across the globe. This has been a tough period for businesses—small and large alike—and our customers. We are committed to walk through this journey together,” noted Safaricom Chief Executive Officer Peter Ndegwa.

Despite a 4.8 per cent drop in service revenue, Safaricom increased capital expenditure by  25.5 per cent to Sh22.75 billion, signaling  investment commitment to building a network infrastructure that supports the country’s economic development. Voice service revenue dropped by 6.5 per cent to Sh 40.19 billion while M-Pesa revenue revenue dropped by 14.5 per cent to Sh35.89 billion.

“As we go into our third decade as an organization, we aim to create a technology business by developing new digital ecosystems in health, agriculture and education sectors as we aim to provide digital solutions for our customers,” added Ndegwa.

“We remain steadfast in ensuring management continues to build on the strong company position that has been established over the last 20 years, running a purpose-driven business, that continues to transform lives and drive future growth,” said Michael Joesph, Chairman, Safaricom Board of Directors.

Revenue streams for Safaricom

The continued focus on customers led to a 10.2 per cent increase in one month active subscribers for the period, with customers growing across all revenue streams.

With the new business strategy and the renewed focus on the customer, Safaricom expects to build on this momentum that has been gained during the second quarter of the period under review.

“Among the customers we will prioritise includes MSMEs and SMEs who we will empower through tailor-made services and products to enable these entrepreneurs to manage their businesses better. This includes the innovative product, Pochi la Biashara, that will allow them to separate business and personal wallets and Lipa Na M-Pesa Merchant App that enables small businesses to effectively manage their business tills,” said Mr Ndegwa.

The company announced plans to provide 100 per cent 4G network coverage across the country by end of this year as part of its growth strategy focused on being the technology partner of choice.