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Safaricom half-year profit drops to Sh30.2 billion
From Left: Safaricom Plc chairman John Ngumi, chief executive officer Peter Ndegwa and chief finance officer Dilip Pal during the telco's announcement of its half-year results at the Michael Joseph Centre in Nairobi on November 11, 2022.
Safaricom has reported an 18.4 percent drop in profits in the half year to September, attributing the fall to heavy costs incurred during its entry into the Ethiopian market, a review of the Mobile Termination Rate (MTR) this year and the introduction of Excise Tax on SIM Cards.
During the release of the April to September financial results, Safaricom announced that its profits after tax dropped from Sh37 billion to Sh30.2 billion.
This was a Sh6.8 billion drop and becomes the lowest profits the telco has reported in a half-year period over the past four years.
“We’ve only had a two months’ impact on MTR because the new rate was introduced in August. If you annualize that, it will be Sh3 billion impact on our business. It has a substantial impact on our business,” Safaricom CEO Peter Ndegwa said as he blamed the move by the Communications Authority of Kenya (CA) to review MTR charges in the country.
Safaricom said as a result of lowering MTR from Sh0.99 to Sh0.58 per minute in August, it lost Sh470 million in revenues.
MTR refers to charges telcos impose on each other when customers make calls across different networks, to facilitate the connection.
Revenues grew marginally
Safaricom’s revenues, however, grew marginally from Sh146.368 billion in the first half of 2021 to Sh153.4 billion in the six months to September, a 4.8 per cent growth.
M-Pesa revenues grew by 8.7 per cent to Sh56.86 billion constituting 39.3 per cent of the company’s service revenues, mobile data revenues by 11.3 per cent to Sh26.3 billion and Fixed Line and Wholesale Transit Revenue by 23 per cent to Sh6.7 billion.
Voice revenues, however, dropped by 3.8 per cent, from Sh41.46 billion during a similar period last year to Sh39.88 billion.
Safaricom heads also blamed the poor performance on costs the group has incurred investing in Ethiopia, even as it projects that the Ethiopian investment will break even after about four years.
