Safaricom

Safaricom headquarters on Nairobi's Waiyaki Way.

| File | Nation Media Group

Safaricom beats Covid blues to post Sh68 billion in profit

Safaricom shareholders are set for a Sh56.09 billion dividend payout after the telecommunications giant defied the Covid-19 pandemic to hold its annual revenue steady at Sh250.3 billion.

The NSE-listed mobile network operator, in results announced yesterday, recorded a marginal 6.8 per cent drop in net profit to Sh68.7 billion for the full-year ended March 2021, down from Sh73.6 billion reported in March 2020. The profit dip, the first in a decade, was attributed to the Covid-19 economic downturn as well as the nearly year-long cut on mobile money transactions.

Group chief executive Peter Ndegwa announced new partnerships with Google and Facebook, as well as the anticipated entry into the vast Ethiopian markets, as part of plans that are intended to boost the telco’s growth.

Treasury and UK telecoms giant are Safaricom’s biggest shareholders, making them the biggest recipients of the dividend cheque. A wide range of local and international shareholders control the other shares through the Nairobi Securities Exchange.

The CEO said Safaricom had a rough first half of the year when the economy was at a near-complete shutdown but rebounded in the second half to report only a 0.3 per cent fall in revenue to Sh250.3 billion compared to the previous year. The firm said over 1.7 billion transactions valued at Sh4.4 trillion were zero-rated during the transaction fees freeze, intended to minimise the handling of cash in the economy.

Mr Ndegwa said the company also made it easier for customers to pay hospital bills by zero-rating Paybill costs to health facilities. A breakdown of its numbers showed that its success story lies in mobile data business, which posted double-digit growth of 11.5 per cent to Sh44.79 billion.

The company said its mobile money platform, M-pesa, accounted for 33 per cent of the total service revenue, down from 33.6 per cent last year, impacted by the waiver of the Peer-to-Peer (P2P) transaction fees.

M-Pesa recorded a 2.1 per cent drop in revenues year-on-year to Sh82.64 billion while voice dropped by 4.6 per cent to register revenue of Sh82.55 billion.

The telco said that in terms of its business ambition, it had launched the M-Pesa Africa Joint Venture, partnered with Google and Facebook for Device Financing. It’s also leading a strong consortium that has submitted a bid as part of the competitive process for entry into Ethiopia.

“Should we be successful, this will allow Safaricom [to] access new growth opportunities for the long term,” the Safaricom CEO added.

The telco said its fibre-to-home performed well due to demand from working and learning from home as M-Pesa bounced back in the second half. The firm has issued a guidance of Sh40 billion to Sh43 billion on capital expenditure in 2022 and is projecting its earnings before interest and taxes (Ebit) to grow to between Sh105 billion to Sh108 billion in the current financial year. Chief Finance Officer Dilip Pal said zero rating of M-Pesa transactions weighed heavily on its performance but it recovered in the second half of the year.

Mr Pal said Smart procurement and digitisation helped the company cut its operating costs.

The CEO said the firm is evolving its business model to transform into an agile outfit by pushing its customer obsession strategy. It declared, for the first time, an interim dividend of Sh0.45 per ordinary share held amounting to Sh18.03 billion.

The board has declared a final dividend per share of Sh0.92 dividend per share amounting to Sh36.86 billion. This brings the total dividend payout to Sh56.09 billion, a marginal decline from 2019.

The telco invested Sh34.96 billion in its network, which was in line with the guidance of Sh35-38 billion for the year.