Safaricom PLC has reported a reduced Kes.33 billion half year profit representing a six percent slide in earnings from Kes.35.2 billion last year making this the company’s first profit slide in the mid-year review since 2012.
The decline in earnings has been attributed to a decline in M-Pesa revenues from the roll out of free cash transfers below Kes.1000 to Kes.35.9 billion from Kes.42 billion last year.
The impact of the free cash transfers was tabulated at Kes.6.1 billion to include Kes.4.5 billion hit on transfers and a Kes.1.6 billion hit on payments.
“The free cash transfers have weighed hard on our half year results. M-Pesa revenues now account for 30 per cent of total revenues in comparison to 33 per cent last year,” noted Safaricom Acting Chief Finance Officer Illana Darcy.
Safaricom has nevertheless recorded a 14.1 per cent growth in mobile data revenues to Kes.22.2 billion from Kes.19.5 billion on the back of the increased data usage by customers with the average chargeable gigabyte per user growing by 33 per cent to 1.4GB in the period.
Fixed service revenue which encompasses fibre connectivity to homes and business was meanwhile marginally down at Kes.4.5 billion from Kes.4.6 billion last year on falling connection to businesses.
The operator’s earnings from voice revenue which relates to phone calls made were down by Kes.2.8 billion on reduced calling patterns among Kenyans during the pandemic.
Cumulatively, Safaricom’s service revenue in the period have contracted by 4.8 per cent to Kes.118.4 billion from Kes.124.3 billion last year.
Safaricom’s Chairman Michael Joseph has nevertheless termed the performance as resilience while pointing to the firm’s support for Kenyans via the free M-Pesa transfers below Kes.1000 which started in March.
“Our results reflect on the resilience that Kenyans have shown during the pandemic. As a purpose led company, we have diversified our portfolio and strengthened our balance sheet and hence we believe we will be able to bounce back,” he said.
Safaricom’s Chief Executive Officer Peter Ndegwa meanwhile indicates the company’s business remains on a strong footing in spite of the slide in earnings as the firm now trails its eyes on regional expansion.
Safaricom further plans to expand its 4G connectivity around the country to 100 per cent by the close of the year having reached a 91 per cent penetration rate in the half year period.
Ndegwa indicates the company remains in discussion with the Central Bank of Kenya (CBK) on the review of free cash transfers below Kes.1000 beyond December 312.
“We have no concerns about the health of the M-Pesa business. This is because we know the decline is from the support of free cash transfers to Kenyans,” he said.
“We are not ready at this stage to announce when the free cash transfers end as we are still in engagements with the CBK.”