Safaricom remains top East Africa company with Sh74.7 billion profit

A Safaricom shop in Nairobi. FILE PHOTO | NMG 

In Summary

The telco said earnings included a Sh3.3 billion one-off exceptional gain arising from acquisition of
the M-Pesa brand.
Safaricom made more money than the top 10 banks combined. Its service revenue grew 4.8 per cent to Sh251.2 billion, meaning, it was generating revenues of Sh20.9 billion every month on average or Sh690 million daily.

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By PAUL WAFULA

Safaricom net profit jumped 19.5 per cent to Sh74.7 billion for the year ended March 2020, extending its lead as East Africa’s most profitable company.

The telco said earnings included a Sh3.3 billion one-off exceptional gain arising from acquisition of the M-Pesa brand.

Without this item, its profit after tax grew 14.3 per cent to Sh71.7 billion. This means that the firm was making profit of Sh6.2 billion every month or Sh200 million every day.

Safaricom made more money than the top 10 banks combined. Its service revenue grew 4.8 per cent to Sh251.2 billion, meaning, it was generating revenues of Sh20.9 billion every month on average or Sh690 million daily.

In the previous year, the telco made a net profit of Sh62 billion. The earnings promise its shareholders among them the government, another windfall in dividends.

The company has proposed a total dividend payout of Sh56.09 billion, which translates to Sh1.4 per share. It represents 80 per cent of the profit and total comprehensive income for the year excluding the one-off exceptional item.

The company said the profits were mainly driven by M-Pesa revenue, which grew by 12.6 per cent to Sh84.4 billion. This contributed 33.6 per cent of the service revenue.

The other driver of profit is mobile data, which increased by 12.1 per cent to Sh40.67 billion.

The reality of voice reaching its peak became clearer after its revenue shrunk by 1.4 per cent to Sh94.45 billion.

Also text message returns took a hit as more people moved to other social medial networking platforms such as WhatsApp. The result was a 12.3 per cent decline in its messaging revenue to Sh17.19 billion.

This is the first results incoming chief executive officer Peter Ndegwa has announced. He will be under pressure to match this performance or better it despite coming in when Kenya is battling the Covid-19 pandemic.

Mr Ndegwa sees the pandemic as giving the telco a chance “to leverage its digital and data capability to support customers and community during this period and through the recovery process.

“We will focus on developing a range of digital products and services that will provide sustainable solutions to challenges in sectors like agriculture, health, education and essential services,” he said.

Smartphone devices, he said, are 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,” Mr Ndegwa added.

In the year under review, its fixed service revenue rose by 10.7 per cent to Sh8.97 billion and its one-month active overall customer base by 9.5 per cent to 28.63 million.

Also, its one-month active M-Pesa customers increased 10 per cent to 24.91 million while active chargeable mobile data customers rose by 10.2 per cent to 19.62 million.

The other most important measure for performance is earnings or profit before interest, which grew by 13.5 per cent to Sh101 billion, the first time it has ever crossed the Sh100 billion mark.

This saw the company end the year with free cash-flow of Sh70.27 billion, which was up 11.4 per cent compared to a similar period the previous year.