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.
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.
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