History as Safaricom makes Sh37bn profit

Kenya’s leading telco, Safaricom PLC, has posted a 21.7 per cent growth in net earnings for the first six months of the year, with the Group service revenue growing by 14 per cent to hit a half-year high of Sh181.4 billion.

According to the financial results unveiled Thursday morning, the Nairobi Securities Exchange-listed firm’s comprehensive net profit for the period was Sh36.7 billion.

The Kenyan unit, however, recorded a net profit of Sh47.5 billion, translating to a 14.1 per cent growth.

The group’s net earnings could have been more but were hampered by currency devaluation in Ethiopia that saw net earnings drop 17.7 per cent to Sh28.1 billion.

The value of Ethiopia’s currency has fallen by 30 per cent against the US dollar after the government relaxed currency restrictions in a bid to secure a loan of $10.7 billion from the International Monetary (IMF) and World Bank.

The strong performance was driven by double-digit growth in the Kenyan unit, where service revenue grew by 12.9 per cent to Sh177 billion, resulting in EBIT and net income growing by 18 per cent to Sh79.2 billion.

”This performance, which comes at a time when we are marking 24 years of connecting and transforming Kenyans’ lives, reflects the relentless execution of our strategy,” Safaricom CEO Peter Ndegwa said.

“We are proud of the value that we have given our customers through the use of technology, and we will continue growing our core business while expanding into new services through our innovative spirit.”

According to Safaricom’s Chief Finance Officer Dilip Pal, M-Pesa contributed 50 per cent of the firm’s total service revenue which grew by 13.1 per cent to Sh179.9 billion.

The mobile money transfer segment of the business contributed Sh77.24 billion to the group’s earnings, having grown 16.6 per cent.

In Kenya, M-Pesa revenue recorded a strong growth of 16.6 per cent to Sh77.22 billion driven by 13.1 per cent growth in Average Revenue Per User (ARPU) to Sh389.27.

Chargeable transactions per one-month active customers increased by 25.6 per cent to 37.37.

One-month active customers grew by 4.1 per cent to 33.46 million while M-Pesa agents rose by 2.4 per cent to 266,007.

“We have seen great performance in new products like pochi la biashara and merchant overdraft products as we continue to support our SMEs in our ecosystem"

The number of pochi tills more than doubled to 869,020 while merchant overdraft (Fuliza) customers grew 72.9 per cent to 52,270. Total M-Pesa transaction value rose 10.7 per cent to Sh 20.85 trillion while volumes grew 30.6 per cent to 17.09 billion.

M-Pesa now accounts for 43.5 per cent of service revenue

.In Ethiopia, M-Pesa revenue closed the half year at Sh24.4 million with 8.31 million registered customers.

Active M-Pesa agents stood at 3,160 while active Lipa na M-Pesa merchants increased to 6,600

“We continue to add more use cases with volume and value transacted at 86.5 million and Sh10.94 billion respectively."

The group’s voice revenue grew by 4.5 per cent to Sh40.87 billion while mobile data contributed Sh37.6 billion to the firm’s earnings, having grown by 21.5 per cent.

Revenue from fixed internet rose by 13.1 per cent to hit Sh8.3 billion while SMS revenue grew by eight per cent to Sh6.3 billion.

In Kenya, mobile data revenue recorded a double-digit growth of 20.2 per cent to Sh35.6 billion driven by 13.5 per cent growth in ARPU to 263.25.

The growth has also been fuelled by an increase in customers, device penetration, provision of the right content to encourage usage, personalized offers through data and analytics and our CVM initiatives.

One-month active mobile data customers grew by 10.5 per cent to 28.83 million.

Data usage per chargeable subscriber rose by 9.8 per cent to 4.12GBs while distinct bundle users went up by 10.2 per cent.

According to the financial report, overall group customers grew 7.8 per cent year-on-year to 52.01 million while one-month active customers grew by 10.8 per cent to 39.75 million. 

This saw Safaricom continue commanding the country’s mobile network market share at Safaricom 65.4 per cent as of June 2024. Kenya’s telco, Safaricom Plc now covers 46 per cent of Ethiopia’s population, just two years after entering the market

.This means that the network has reached at least 52 million of the country’s 112 million population.

According to Safaricom’s Group chairman, Adil Khawaja, the firm is working to meet its license obligation of 55 per cent cover by June 2025.

The Kenyan firm became the first private operator in one of Africa’s largest telecoms markets in early October 2022 after placing a bid worth $850 million close to (Sh110 billion) to bag the license.

The financial report shows that the Ethiopian market reported growth across product offerings despite suffering a currency devaluation that impacted the Group’s overall profitability