Safaricom profit falls for the first time in ten years

Safaricom PLC profits have fallen for the first time in a decade. The telco posted KES 68.7 billion in profits for the year ending March 2021. This was a 6.8 percent dip from last year when it announced KES 73.6 billion.

Safaricom is among the most valuable brands in Africa according to Forbes. The last time the telco announced a dip in profit was in 2012.

M-PESA contributes a large chunk to the profit margins of the telco, and now has a dedicated CEO for Africa. The waiver on fees on mobile money transactions of up to KES 1000 is largely the cause of this dip. The waiver was announced by the Central Bank of Kenya at the end of March last year up to December as part of efforts to shield users from the impact of the Covid-19 pandemic. As a result, mobile money earnings shrunk by 2.1 percent.

The MPESA revenues fell to KES 82.6 billion from KES 84.4 billion the previous FY. Voice calls revenues also dipped to KES 42.4 billion from KES 43.5 billion.

The Safaricom home fibre and mobile data business however looks set for growth as their revenues grew. Mobile data doubled its earnings to KES 22.6 billion, an 11.5 percent growth. Fixed data grew by 6 percent to KES 9.5 billion.

Safaricom introduced device financing support to customers where they would give 4G smartphones on loan, with consumers repaying for them for as low as KES 20 daily.

The growth of fixed data may be attributed to the work-from-home and home-schooling measures precipitated by the Covid-19 pandemic.

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“We started our financial year in a lock-down and ended the year in another lock down. The board takes note of our business resilience especially a rebound in growth in the second half of the year. This has given us the opportunity to support our shareholders at this difficult time,” said Safaricom Chairman Michael Joseph.